Adani loses Asia’s richest krone as stock destruction hits $86 billion

BENGALURU, Feb 1 (Reuters) – Shares in Indian tycoon Gautam Adani’s conglomerate plunged again on Wednesday as the flight into its companies deepened to $86 billion, according to a US short seller report, with the billionaire also losing his title as Asia’s richest lost person.

Wednesday’s stock losses saw Adani slip with an estimated net worth of $75.1 billion (RELI.NS) who ranks ninth with a net worth of $83.7 billion.

Before the critical report by US short seller Hindenburg, Adani had ranked third.

The losses mark a dramatic setback for Adani, the high school dropout-turned-billionaire whose wealth has soared in recent years in line with the share values ​​of his companies, which include ports, airports, mining, cement and energy. Now the tycoon is struggling to stabilize his businesses and defend his reputation.

The stock slide comes just a day after Adani Group managed to garner support from investors for $2.5 billion stock sale for the flagship company Adani Enterprises (ADEL.NS)which some saw as a sign of investor confidence in times of crisis.

The Hindenburg Research report last week allegedly abuse by the offshore tax haven group and stock manipulation. It also raised concerns about the high level of debt and valuations of seven Adani listed companies.

The group has denied the allegations, and said the short seller’s narrative of stock manipulation had “no basis” and stemmed from an ignorance of Indian law. It has always made the necessary regulatory disclosures, it added.

Shares in Adani Enterprises, often dubbed the incubator of Adani companies, plunged 28% on Wednesday, taking losses to more than $18 billion since the Hindenburg report. Adani Ports and Special Economic Zone (APSE.NS) 19% down. Both stocks marked their worst day ever.

“The type of decline we’re seeing in Adani shares is scary,” said Avinash Gorakshakar, head of research at Mumbai-based Profitmart Securities.

Adani power (ADAN.NS) and Adani Wilmar (ADAW.NS) fell 5% each and Adani Total Gas (ADAG.NS) plummeted 10% with all three falling below their daily price limits. Adani transmission (ADAI.NS) down 3% and Adani Green Energy (ADNA.NS) 5.6%.

Adani Total Gas, a joint venture with France’s Total (TTEF.PA)was the biggest casualty of the short seller report, losing about $27 billion.

Dollar bonds issued by Adani entities also continued their slide on Wednesday. US dollar-denominated Adani Ports bonds due February 2031 led the losses, falling 3.59 cents to 67.58 cents.

Underscoring the nervousness in some quarters, Bloomberg reported that Credit Suisse (CSGN.S) had stopped accepting bonds from Adani Group companies as collateral for margin loans to its private banking clients.

Deven Choksey, chief executive of KRChoksey Shares and Securities, said it was a major factor in Wednesday’s slide.

Credit Suisse had no immediate comment.

After shedding $86 billion over the past few days — 16% of India’s $550 billion in annual budget spending announced on Wednesday — the Adani Group’s seven listed companies now have a combined market capitalization of about 131 billion dollars.

TRUST DAMAGED

“Yesterday there was a slight bounce after the stock sale was implemented after it seemed unlikely at one point, but now the soft market sentiment following the bombastic Hindenburg report has resurfaced,” said Ambareesh Baliga, a Mumbai-based independent market analyst.

“The fact that stocks fell despite Adani’s rebuttal clearly shows that investor sentiment is somewhat damaged. It will take a while to stabilize,” Baliga added.

Asked if he was worried about major losses in Indian stock markets as shares of the Adani Group slumped, Economy Minister Ajay Seth said the government “does not comment on matters related to any particular company”.

India’s benchmark index, the Nifty, is down 2.7% since the Hindenburg report. The data also shows that foreign investors sold a net $1.5 billion worth of Indian stocks after the Hindenburg report — the biggest outflow in four consecutive days since September. 30

The scrutiny of the conglomerate will be intensified, an Australian regulator announced on Wednesday Check out Hindenburg’s allegations to see if further investigation was warranted.

India’s market regulator, which has been investigating deals by the conglomerate, will do so Add Hindenburg’s report on his own preliminary investigation, sources told Reuters. The regulator has not commented on the Adani-Hindenburg saga.

Indian credit rating agency ICRA Ltd, a unit of Moody’s Investors Service, said Wednesday it was monitoring the impact of developments on its rated portfolio at Adani Group. It added that while the group’s large debt-financed investment plan was an “important challenge”, some of it was discretionary in nature and could be deferred depending on liquidity conditions.

India’s State Life Insurance Corporation (LIC) (LIFI.NS)said on Monday it would seek clarifications from Adani’s management on the short seller report. LIC owned 4.23% stake in Adani Enterprises and more than 9% stake in Adani Ports and Special Economic Zone at the end of December. The insurance giant was also a key investor in Adani’s recent share sale.

Shares in the cement company ACC (ACC.NS) and Ambuja cements (ABUJ.NS)which the Adani Group bought from the Swiss company Holcim (HOLN.S) for $10.5 billion last year, they fell 6.2% and 16.7%, respectively.

Hindenburg said in his report that he had shorted US bonds and non-India derivatives of the Adani group.

Reporting by Chris Thomas in Bengaluru and Aditya Kalra and Aditi Shah in New Delhi; Additional reporting from Bharath Rajeshwaran, Nikunj Ohri and Sethuraman NR; Editing by Edwina Gibbs and Mark Potter

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