Adani group loses $44 billions after Hindenburg Research accuses it of ‘brazen manipulation, accounting fraud’

Gautam Adani. [File Photo]

On Friday, the shares of India’s Adani Enterprises sank 15% after a scathing report by a US short seller triggered a rout in the conglomerate’s listed firms.

This raised doubts about how investors will respond to the company’s record $2.45 billion secondary sale, Reuters reported.

Seven listed Adani conglomerate companies, owned by one of the richest men in the world, Gautam Adani, have seen their market capitalization decline by a combined $43.5 billion since Wednesday. Adani company US bonds have also declined as a result of Hindenburg Research raising concerns about debt levels and the use of tax havens in a report on January 24.

Adani Group has dismissed the report as baseless and said it is considering whether to take legal action against the New York-based firm.

“There were heavy positions in Adani group (shares), the way they have risen in the last couple of years,” the report quoted, Neeraj Dewan, director at Quantum Securities in New Delhi, as saying.

“This is a classic case of panic selling…,” he said, noting the concerns were also spreading to Indian banks with exposure to Adani group’s debt.

While the primary Nifty Bank index declined 2.7%, the index that tracks state-run banks was down 4.6%.

In the fiscal year ending in March 2022, according to CLSA, Indian banks were exposed to nearly 40% of the 2 trillion Indian rupees ($24.53 billion) in debt held by the Adani group.

The secondary sale of Adani Enterprises, which started on Friday, has been adversely affected by the shocking selloff.

Investors, including the Abu Dhabi Investment Authority, participated in the anchor component of the auction on Wednesday.

The company has established a floor price per share of 3,112 rupees ($38.22) and a ceiling price of 3,276 rupees.

However, by Friday midday, the shares had plunged to 2,875 rupees, much below the lowest price offered.

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