What’s Next for Adani Group After Short Seller Hindenburg Report Wipes Out Over $50 Billion in Market Value

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    Indian stock markets were rattled last week by the attack on the Adani Group from US activist investor and short-seller Hindenburg Research’s report i
    [See the full post at: What’s Next for Adani Group After Short Seller Hindenburg Report Wipes Out Over $50 Billion in Market Value]


    Shares of six of the seven companies bearing Adani’s name extended their losses on Monday on India’s domestic market.

    Adani Total Gas Ltd. and Adani Green Energy Ltd. each fell 20%—the maximum single-day decline permitted by the exchange for those stocks.

    The seven companies have now lost the equivalent of around $64 billion in market value since last Tuesday’s close, according to FactSet data.

    Adani Enterprises Ltd. , which is pushing ahead with a large follow-on public stock offering, bucked the trend with a 4.2% gain, but its shares remained below the price floor for the deal. Retail subscriptions for the offering, which the company is hoping will raise the equivalent of $2.5 billion, are scheduled to close on Tuesday.


    Bid prices of two closely watched U.S. dollar bonds issued by Adani companies tumbled to about 73 cents on the dollar on Monday, reflecting growing default concerns among debt investors. The yield on an Adani Green bond with a 4.375% coupon that comes due in 2024 soared above 20%, according to Tradeweb data.


    In an interview with an Indian television network that was shown on Monday, Adani Group Chief Financial Officer Jugeshinder Singh said the conglomerate hasn’t seen any large, strategic investors exiting their positions in its listed companies.

    “We believe that this volatility will pass,” he said, adding that the group will release its quarterly results in about a week’s time.

    “People will see that the group continues on its upward trend,” he said.

    Addressing the jitters around the group’s debt-repayment abilities, Mr. Singh said the credit profile of Adani’s large companies was similar to that of India’s sovereign enterprises. “We are the highest-rated infrastructure portfolio in the country, with the exception of the government of India,” he said.


    Mr. Adani hasn’t made any public comments about Hindenburg’s allegations so far.

    The 60-year-old industrialist, who is known to be well-connected politically in India, has accumulated tremendous wealth over the last few decades through companies that own coal mines, ports, cement producers and other assets.

    The market value of the seven companies bearing Adani’s name, and two other listed industrial companies that the group controls, totaled the equivalent of around $235 billion last week before Hindenburg’s report was released. That had dropped to $169 billion as of Monday, according to FactSet.

    Strong price run-ups in the Adani companies’ shares over the last year and a half took some of their price-to-earnings ratios to triple-digit levels, making the group vulnerable to attacks from short sellers, said James Thom, senior investment director of Asian equities at

    “Clearly there’s a disconnect between valuations and fundamentals,” he said.

    Worries that MSCI could end up excluding Adani stocks from its indexes likely contributed to Monday’s selloff, said Deven Choksey,
    managing director of KRChoksey Shares & Securities in Mumbai. He said the recent large declines may also trigger margin calls for traders that borrowed to purchase the shares, which could result in further selling.


    On Sunday, the energy and infrastructure group released a strongly worded document addressing the allegations of fraud and misconduct put forth last week by Hindenburg Research. The New York-based firm, which was founded by Nathan Anderson, alleged that stock manipulation and questionable business and accounting practices had caused the market valuation of Adani’s key listed companies to appreciate sharply over the past few years.

    Adani Group said the short seller’s report was “nothing but a lie.” It called the report “a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India.” It said most of the 88 questions raised by Hindenburg had already been addressed through public disclosures, and it included answers to each of them.


    Hindenburg responded within hours, saying that Adani Group’s rebuttal stoked nationalist sentiment and failed to adequately address the issues it had raised. The firm has bearish bets on the conglomerate via U.S.-traded bonds and derivatives that aren’t traded in India.


    Adani Draws Enough Investor Bids to Pull Off $2.5 Billion Stock Sale

    By Tuesday afternoon in India, a public share offering by Adani Enterprises Ltd. was slightly oversubscribed—indicating that the Mumbai-listed company would be able to complete the deal, which aimed to raise up to $2.5 billion.

    The share sale had been in the works before New York-based Hindenburg Research released a scathing report last week targeting the giant energy and infrastructure conglomerate controlled by Gautam Adani, one of the world’s wealthiest individuals.

    Since then, Adani Group and the short seller have traded barbs while the shares of seven listed companies bearing the Adani name have collectively lost the equivalent of $64 billion in market value.

    Some Adani companies’ shares fell for a fourth trading day Tuesday while others rose slightly. Early in the day, India’s two largest stock exchanges adjusted their daily trading ranges for three Adani-linked companies, limiting their maximum change in either direction to 10%, from 20% previously.

    The shares of Adani Total Gas Ltd. , one of the three firms whose shares were subject to the narrower trading band, fell by the maximum allowable limit of 10% Tuesday. The other two companies, Adani Green Energy Ltd. and Adani Transmission Ltd. , chalked up low-single-digit percentage gains.

    Shares of Adani Enterprises, the company pursuing the follow-on stock sale, also rose, to levels slightly below the base price of the offering. Its shares have soared over the last few years, taking their historical price-to-earnings multiple to more than 400 times.

    Adani Enterprises had earlier secured around $734 million in purchase commitments for the deal from more than 30 anchor investors. They included various international securities firms, the Abu Dhabi Investment Authority and state-backed behemoth Life Insurance Corporation of India. On Monday, an Abu Dhabi-based conglomerate, International Holding Co., said it would buy $400 million worth of shares in the offering in a public show of support for the group.

    Most of the bids for the rest of the offering came from large investors, including companies. Many trickled in during the last few hours of the offering. The retail-investor portion of the deal was only 12% subscribed.

    The company is scheduled to price the deal Wednesday, according to its regulatory filings. It plans to use some of the proceeds to fund capital expenditures for green-energy projects, expressway construction and airport improvements. It also intends to repay some debt.

    Adani Enterprises’ sprawling business portfolio includes green hydrogen, data centers, mining, defense and airport development.

    Hindenburg Research has made bearish bets against the Adani companies through their U.S. dollar bonds and derivatives that aren’t traded in India. The group’s dollar bonds have dropped in price since the short-seller’s report came out. They recovered some losses Tuesday, according to Tradeweb data.

    The selloff following Hindenburg’s allegations has eroded Mr. Adani’s net worth. The 60-year-old was once the world’s second-richest person but is now ranked 11th at $84.4 billion as of Tuesday, according to the Bloomberg Billionaires Index.



    Adani market value losses deepen to $85 billion since release of #HindenburgReport

    Adani Enterprises lost >25% hitting investors that took part in $2.5 billion follow-on public offering with immediate paper losses

    The 6 other Adani’s fell 2%-20% in some cases by the maximum amount allowed by India’s stock exchanges.

    Wednesday marked the fifth trading day after a New York-based short seller, Hindenburg Research, published a scathing report containing wide-ranging allegations of fraud and malpractices at Mr. Adani’s companies. The 60-year-old industrialist hasn’t personally addressed the allegations so far, but his conglomerate has batted back the allegations, criticized the short seller and its motives, and issued a lengthy rebuttal to Hindenburg

    The seven Adani companies listed in India have now lost the equivalent of $85 billion in combined market value since the Hindenburg report was published last Tuesday. Shares of two other industrial companies that the group controls, Ambuja Cements Ltd. and its subsidiary ACC Ltd. , have also dropped sharply.

    Indian banks are among the major creditors to the Adani companies, which funded much of their rapid expansion in recent years with debt. Big drops in the companies’ dollar bond prices have sent their yields sharply higher, indicating that investors are worried about their default risk.

    “It’s a bit of a question mark on India’s corporate governance, transparency and corruption,” said Charu Chanana, market strategist at Saxo Markets, referring to the recent furor over the Adani Group. She said in a note earlier this week that the dispute between the conglomerate and Hindenburg has alarmed foreign investors and could negatively affect their confidence in India.

    But with other major economies potentially slipping into mild recession, and China’s growth outlook still uncertain, many investors are still focused on the broad underlying factors supporting India’s growth, Ms. Chanana added.

    “This development remains quite fluid, therefore it’s hard to draw a conclusion related to its spillover effect on other industries,” said Vivian Lin Thurston, a portfolio manager at Chicago-based William Blair Investment Management. She said the firm is continuing to monitor how the row between Adani Group and Hindenburg evolves.


    The Reserve Bank of India has asked banks to disclose their exposure to Adani Group after the company lost more than $100 bln in value in response to a short seller’s report.


    Shares of Adani 7 companies now down $103 billion since Jan. 24

    Has been difficult for some to get out with halts at maximum daily loss of 10% allowed by India’s stock exchanges for their shares.


    Foreign institutional investors sold a net $4.2 billion in Indian equities in year through Feb. 3 via WSJ.

    – MSCI India Index has dropped 4.2% this year through Feb. 3, compared with an 8.6% gain in the wider emerging-markets index.


    Adani Plans $1.1 Billion Loan Repayment After Share Collateral Plummets

    The shares of four Adani companies were pledged as a collateral for the $1.1 billion loan—Adani Enterprises, Adani Green Energy, Adani Ports & Special Economic Zone Ltd. and Adani Transmission.

    The Adani Group said Monday that its so-called promoters—a term used to describe controlling shareholders—have posted amounts to pay off the loan ahead of its maturity in September 2024. The loan was backed by shares in several Adani companies, all of which have fallen dramatically since U.S. short seller Hindenburg Research published a scathing report on the Adani Group on Jan. 24.

    Since the rout began last month, India’s stock-market operators have gradually reduced the maximum amount that Adani stock prices can fall. The maximum move of Adani Green Energy Ltd.’s shares, which have more than halved in value since the Hindenburg report was published, was reduced to 5% from 10% before trading commenced on Monday. The limit for Adani Total Gas Ltd. was cut to the same level on Friday. Both stocks fell the maximum amount on Monday, alongside other Adani companies.

    The seven listed companies bearing the Adani name have now lost the equivalent of $111 billion in value following the release of the Hindenburg report, according to FactSet data.

    After the market closed on Monday, Adani Transmission Ltd. released its results for October through December, the third quarter of India’s financial year. The company said both revenue and profit rose by double digits. Several other Adani companies are due to release their quarterly results this week.



    ‘No exposure left’: Norway’s wealth fund divests all Adani Group’s shares

    The fund had divested from five Adani companies since 2014 and at the end of 2022, it remained invested in three, including Adani Ports.

    Norway’s $1.35 trillion sovereign wealth fund said on Thursday it has in recent weeks divested virtually all its remaining shares in companies belonging to India’s Adani group.

    “We have monitored Adani for many years (on ESG) issues, many on their handling of environmental risks,” Christopher Wright, the fund’s head of ESG risk monitoring, told a news conference.

    The fund had divested from five Adani companies since 2014 and at the end of 2022, it remained invested in three, including Adani Ports.

    “Since year-end, we have further reduced in Adani companies. We have no exposure left,” he said.

    At the end of 2022, the Norwegian fund held shares in Adani Green Energy worth $52.7 million, a stake in Adani Total Gas worth $83.6 million and ownership in Adani Ports & Special Economic Zone worth $63.4 million.


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