Mumbai: Shares of Adani Enterprises plunged Friday as a scathing report by a US short seller triggered a massive selloff in the conglomerate’s listed firms, casting doubts on the company’s record $2.45 billion secondary offering. Seven listed companies of the Adani conglomerate – controlled by one of the world’s richest men Gautam Adani – have lost a combined $48 billion in market capitalisation since Wednesday, with US bonds of Adani firms also falling after Hindenburg Research flagged concerns in a January 24 report about debt levels and the use of tax havens.
The rout took shares of Adani Enterprises, the group’s flagship company, well below the offer price of its secondary sale that had initially been offered at a discount. As bidding started Friday, the issue was subscribed 1%, raising concerns over whether it would be able to proceed.
Capital markets regulator SEBI is studying the Hindenburg report and may use it to aid its own ongoing probe into offshore fund holdings of Adani Group, two sources said. Spokespersons for the regulator and Adani had no immediate comment.
Adani Group has dismissed the Hindenburg report as baseless and said it is considering whether to take legal action against the New York-based firm.
With a net worth of $96.6 billion, billionaire Gautam Adani is now the world’s seventh richest man, according to Forbes, slipping from the third position he held before the Hindenburg report.
The billionaire hails from Gujarat, the home state of Prime Minister Narendra Modi. The Congress has often accused Adani and other billionaires of getting favourable policy treatment from Modi’s administration, allegations the billionaire denies.
SKY-HIGH VALUATIONS
In its report, Hindenburg said key listed Adani Group companies had substantial debt, putting the conglomerate on a precarious financial footing. It also said sky-high valuations had pushed the share prices of seven listed Adani companies as much as 85% beyond actual value.
Adani Group has repeatedly dismissed concern about its debt levels. It defended itself Thursday in a presentation titled ‘Myths of Short Seller’.
Adani has been diversifying its business interests and last year bought cement firms ACC and Ambuja Cements from Switzerland’s Holcim for $10.5 billion. ACC shares slid 13.2% Friday, while Ambuja plunged 17.3%.