Losses in Adani Group shares hit $100 billion on Thursday after the conglomerate’s flagship reversed a $2.4 billion share sale, saying it would be ‘not morally correct’ to proceed. given the deletion of shares.
All 10 shares controlled by Adani Group fell in early trading in Mumbai. Adani Enterprises, Adani Transmission and Adani Ports extended losses by 10%, worsening a sell-off sparked last week by a short-seller attack on the conglomerate.
In a video address released shortly before markets open on Thursday, founder Gautam Adani dismissed concerns about the financial health of his empire, saying the cancellation of the stock sale “will have no impact on our operations. existing ones and our future projects”.
He said that “given the market volatility seen yesterday, the board strongly felt that it would not be morally correct to proceed” with the follow-on offer, adding that “once the market will have stabilised, we will review our capital market strategy”. .
Wednesday’s decision to withdraw the share sale and refund investors came after Adani Enterprises shares fell to Rs 2,179.75 ($27), well below the floor price of the deal. Rs.3,112.
Adani Group shares have now lost more than 8.4 billion rupees since short seller Hindenburg Research last Wednesday accused the conglomerate of using offshore entities in tax havens to inflate the share price of its listed companies , allowing them to take on more debt and “putting the whole group in a precarious financial situation”. Adani Group has denied the allegations.
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Adani has made repeated efforts to reassure investors ahead of the stock sale, including issuing a 413-page response to the short seller’s allegations. He also recruited some of India’s top tycoons to help push the follow-up offer down the line.
Anchor investors including Abu Dhabi’s International Holding Company and London-listed Jupiter Asset Management had already pledged to buy 30% of the offering before the start of the public sale of shares on Friday. IHC on Monday pledged to invest $400 million in the sale.
The sale prompted some financial groups, including Citigroup’s wealth management unit, to stop accepting Adani securities as collateral for margin lending, according to a person with direct knowledge of the situation.
The Adani Group also on Thursday denied “market rumours” that shares of its cement manufacturing companies, 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 resulting from the fall in the share price.
Adani Group debt was also hit by the selloff, with an Adani Ports dollar bond maturing in 2024 dropping 20 cents to just under $0.70 on the dollar on Wednesday, while another maturing in 2024 from Adani Green Energy fell about 10 cents to $0.67 on the dollar.