All Eyes on India Market Regulator Amid Adani Share Sale Probe

 

India’s market regulator will remain in the spotlight this week as it prepares to brief the central government on Adani Group’s now-shelved $2.5-billion share sale, while also facing scrutiny from the country’s apex court.

The Securities and Exchange Board of India (SEBI) will update India’s finance ministry officials on its investigation in the mega share sale on February 15, sources said, on condition of anonymity as they are not allowed to speak to the media.

Adani Group shelved the fully-subscribed share sale following a market rout triggered by US short-seller Hindenburg’s report that accused the ports-to-power conglomerate of a massive ‘corporate con’.

 

Also on AF: Indian Protesters Say Modi Favoured Adani as Losses Top $110bn

 

The group’s seven listed stocks have lost more than $100 billion in market value since the report was released on January 24.

Market regulator SEBI is said to be probing the sharp sell-off. It is also looking into trade patterns and any potential irregularities in the $2.5-billion share amid concerns that it involved participation from institutions linked to Adani Group.

Meanwhile, all listed shares of the Adani Group remained under pressure on Monday. Adani Enterprises fell 3%, while Adani Total Gas, Adani Power and Adani Transmission lost 5% each.

Adani Total, a joint venture with France’s TotalEnergies, has lost 70% since the Hindenburg report, while Adani Enterprises is down 50%.

 

Regulatory framework under scrutiny

India’s top court is also set to resume its hearing on Monday on public interest petitions that raised concerns about steep investor losses sparked by Hindenburg’s report.

The Supreme Court has asked SEBI to explain its regulatory frameworks and how such losses can be prevented in the future.

The fallout from the Hindenburg report has sparked worries of financial contagion in India. Lawmakers were seen protesting in parliament last week, demanding an investigation into Adani, who is considered a close associate of Prime Minister Narendra Modi.

On Friday, credit agency Moody’s downgraded its ratings outlook for four Adani Group companies to negative from stable. Index provider MSCI also said it would cut the weightings of some in its stock indexes.

The developments have cast a shadow on the company’s capital raising plans.

Media reports said on Monday that Adani has halved its revenue growth target and plans to scale down fresh capital expenditure. However, a company spokesperson rejected the reports saying they were “baseless, speculative”.

 

Singapore’s DBS ‘not concerned about exposure’

Singapore’s DBS Group disclosed on Monday it has a S$1.3 billion ($976 million) exposure to Adani group companies, out of which S$1 billion was to finance its cement business.

It said, however, it was not concerned about its exposure to the group.

“They’re solid, cash-generating companies, so we’re not concerned about the exposure,” chief executive Piyush Gupta told an earnings briefing, referring to the cement business, which Adani acquired for $10.5 billion last year from Holcim.

DBS was among a group of banks which provided financing.

Adani group has said it is considering an independent evaluation of issues relating to legal compliance following the Hindenburg report.

Hindenburg had accused Adani group of improper use of offshore tax havens and stock manipulation, allegations the company has strongly denied.

In recent days, concerns have also risen about exposure of Indian and foreign lenders to the Adani group.

In its rebuttal of Hindenburg’s allegations, the conglomerate pointed to its international banking relationships as a sign of its strength.

 

• Reuters, with additional editing by Vishakha Saxena

 

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Big Money Rescues Adani Share Sale Despite Hindenburg Fallout

Hindenburg Asks Adani to ‘Sue in US if Serious’