Indian billionaire Gautam Adani broke his silence to defend his industrial empire despite a canceled $2.4 billion share sale following a short seller attack.
losses for Adani group Shares rose to $100 billion on Thursday after the conglomerate’s flagship called off the share offering and said it was “morally unacceptable” to proceed in the face of the share wipeout.
In a video address released just before the market opened, founder Adani dismissed concerns about the group’s finances, saying the decision not to proceed with fundraising for Adani Enterprises “has no impact on our existing operations and future plans”.
He said the sale was halted to protect investors who would otherwise have faced hefty losses due to the company’s decline in value since the deal was signed.
“For me, the interests of my investors come first [else] is secondary,” Adani said in the address released by the company. “To protect investors from potential losses, we withdrew this [sale].”
The group’s chairman said the company’s earnings and cash flows are “very strong” and that it has “an impeccable track record of meeting our debt obligations.”
“Our balance sheet is healthy and our assets are robust,” said Adani. “As soon as the market stabilizes, we will review our capital market strategy.”
Adani Group’s shares are now more than Rs 8.4 trillion (putting the entire group on a precarious financial footing). Adani Group has denied the allegations.
Shares of all 10 listed companies controlled by the conglomerate fell in early trading in Mumbai on Thursday, although some later rallied. Adani Enterprises fell more than 18 percent, while both Adani Transmission and Adani Ports fell 10 percent.
The decision on Wednesday Drag stock sale and refund investors came after Adani Enterprises shares fell to Rs 2,179.75 ($27), well below the deal’s Rs 3,112 reserve price.
Several Indian opposition MPs on Thursday called for parliament to allow time to debate Hindenburg’s allegations. Adani Group investors include government entities such as Life Insurance Corporation of India and State Bank of India.
Adani made repeated efforts to reassure investors ahead of the stock sale, including releasing a 413-page response to the short seller’s allegations. It also recruited some of India’s leading industrial magnates to help get the follow-up offer across the line.
Anchor investors, including Abu Dhabi-based International Holding Company and London-listed Jupiter Asset Management, had already committed to buy 30 percent of the offering before the public share sale began on Friday. IHC on Monday pledged to invest $400 million on sale.
According to one person with direct knowledge of the situation, the sell-off has prompted some financial groups, including Citigroup’s wealth division, to stop accepting Adani securities as collateral for margin loans.
The Adani Group also on Thursday denied “market rumours” that shares in its cement makers Ambuja Cements and ACC had been pledged as collateral as part of the acquisition financing and that the group was under pressure to cover losses due to share price declines.
Adani Group’s debt was also hit by selling, with a dollar bond from Adani Ports due 2024 falling 20 cents to just under $0.70 against the dollar on Wednesday, while another bond from Adani due 2024 Green Energy fell further by about 10 cents to $0.67 USD.
