A 413-page response from billionaire trading group Gautam Adani failed to restore investor confidence in his business empire as stock market losses deepened and major dollar bonds fell to new lows.
Shares across the Adani Group fell on Monday despite a drawn-out denial by the Indian conglomerate over the weekend of allegations of fraud by Hindenburg Research, which shorted the group’s non-India-traded derivatives. The three-day sell-off wiped out the group’s market capitalization of nearly $72 billion amid a sell-off in Adani’s stock that was supposed to confirm the businessman’s ascension to the global stage.
And while the Adani Group has portrayed Hindenburg’s accusations as baseless and an attack on India itself, the saga revives long-standing investor concerns about the group’s corporate governance. It also threatens to weaken confidence in broader India, which until recently was Wall Street’s main investment destination, and accelerate the emerging shift towards opening up China.
“I’m not sure Adani’s rebuttal is enough to allay investor concerns,” said Brian Freitas, analyst at Smart Karma. “How does the large group explain the lack of research coverage and lack of mutual funds?” – he asked.
In a response posted on Sunday, Adani said about 65 of the 88 issues Hindenburg raised were addressed in the group’s public statements, describing the seller’s bearish behavior as “nothing more than calculated securities fraud under applicable law.” “. The group affirmed that it will “exercise its rights to use remedies to defend its stakeholders before all relevant authorities.”
Hindenburg said Adani’s denial ignored all major allegations. The research firm added on Monday that the group’s statement failed to answer 62 of Hindenburg’s 88 questions, confusing the company’s “rapid growth” with the fortune of Asia’s richest man. India itself.
Adani shares were among the best last year not only in the local market, but also in the MSCI Asia Pacific index.
The sell-off continued on Monday, with Adani Total Gas Ltd and Adani Transmission Ltd shares falling 20%. Adani Enterprises also erased its previous 10% gain, falling 2%.
Shares of Adani Enterprises are now trading below the floor set for the sale of shares in the new public offering. During which the company seeks to raise 200 billion rupees (2.5 billion dollars).
Only 2% of the offered shares were signed by Adani Enterprises, which closes on Tuesday, as of 13:42. in Mumbai on Monday. Individual investors offer 3% of the shares offered to them, and company employees offer 10% of the shares of their class. The non-institutional segment, which includes rich people, was signed at 1%. Institutional investors are bidding for 4,576 shares, a small fraction of the 12.8 million shares offered.
While investors in Indian IPOs usually wait until the last day of a sale to apply, fears are growing that the Hindenburg report will affect investor appetite.
For his part, Adani Group CFO Jogshinder Singh said in an interview with CNBC TV 18 that the sale prices of the additional shares will not change and they will continue as scheduled.
The fall of the dollar bonds of Adani Group accelerated on Monday. Adani Ports & Special Economic Zone Ltd bonds maturing in 2027 were down 6.2 cents, data from Bloomberg showed.
At least 4 other bond issues, including those of Adani Electricity Mumbai Ltd., fell to troubled levels below 70 cents on the dollar, broadly indicating growing credit concerns.
