India’s Adani’s $48 billion stock crash tarnishes record share sale

indian stocks Adani Enterprises They plunged 20% on Friday as a harsh report from a US short seller triggered a plummet for the conglomerate’s publicly traded firms, casting doubt on how investors will respond to the record $2.45 billion secondary offering. company dollars.

Seven publicly traded companies of the Adani conglomerate – controlled by one of the world’s richest men, Gautam Adani– have collectively lost $48 billion in market capitalization since Wednesday, and US bonds held by Adani’s companies have also fallen after Hindenburg Research on January 24 signaled concerns about debt levels and the use of tax havens.

The drop sent shares of Adani Enterprises, the group’s flagship company, well below the offer price of its secondary sale, which had initially been set at a discount.

The Adani Group is concerned about falling share prices but is standing by as the sale of shares continues until January 31, two people with direct knowledge of the talks said.

India’s capital markets regulator is studying the Hindenburg report and may use it to help its own ongoing investigation into the Adani Group’s offshore fund holdings, two other sources said. Spokesmen for the regulator and for Adani had no immediate comment.

Adani Group has dismissed the Hindenburg report as unfounded and has said it is considering legal action against the New York-based company. He did not immediately respond to a request for comment on the regulator’s actions.

The impressive sell-off has overshadowed the secondary sale of shares of Adani Enterprises that began this Friday. The main part of the sale on Wednesday included the participation of investors such as the Abu Dhabi Investment Authority.

As of 08:18 GMT, investors, mostly retailers, had bid for some 320,000 Adani Enterprises shares, or less than 1% of the 45.5 million on offer, according to data from the BSE stock exchange. Bidding for retail investors will close on January 31.

The company has set a floor price of Rs 3,112 (about $38.22) per share and a ceiling of Rs 3,276. But on Friday the shares fell to Rs 2,721.65, well below the minimum offered price.

Shares of other Adani listed companies also plunged, with Adani Transmission Ltd, Adani Total Gas, Adani Green Energy and Adani Ports plunging 20% ​​each.

Adani Ports, Adani Green Energy and Adani Transmission posted their worst intraday decline, with strong volumes.

In his report, Hindenburg claimed that the major listed companies in the Adani Group had “substantial debt”, putting the conglomerate in a “precarious financial situation”, and that “sky-high valuations” had driven share prices of seven Adani listed companies up to 85% above their real value.

Hindenburg said he was short Adani through his US-traded bonds and non-Indian-traded derivatives.

With a net worth of $97.6 billion, billionaire Gautam Adani is now the seventh-richest man in the world, according to Forbes, down from the third position he held before the Hindenburg report.