Losses for Adani Group shares hit $100bn on Thursday after the conglomerate’s flagship company canceled a $2.4bn equity sale, saying it was “morally wrong” to proceed if the stock had already lost ground.
All 10 stocks controlled by Adani Group fell in early trade in Mumbai. Adani Corporation, Adani Transmission and Adani Ports extended losses by 10 percent, adding to a sell-off triggered last week by a short-seller strike at the conglomerate.
In a video address released shortly before markets opened on Thursday, founder Gautam Adani dismissed concerns about the financial health of his empire, saying the cancellation of the share sale “will have no impact on existing operations and future plans”.
He said that “considering the volatility of the market seen yesterday, the board felt that it would not be morally right to proceed” with the follow-up offering, adding that “once the market stabilizes, we will review the capital market strategy”.
Wednesday’s decision to pull the stake sale and refund investors came after shares in Adani Enterprises fell to Rs2,179.75 ($27), far from the floor price of Rs3,112.
Adani Group shares have now lost more than Rs8.4tn since short seller Hindenburg Research accused the conglomerate last Wednesday of using offshore entities in tax havens to inflate the share price of the listed company, so it could take on more debt and “put the whole group on its feet.” financial instability”. Adani Group denied the allegations.
You see a picture of an interactive graphic. This is likely because you are offline or JavaScript is disabled in your browser.
Adani made repeated attempts to reassure investors during the share sale, including releasing a 413-page response to allegations of short sellers. It has also enlisted some of India’s leading tycoons to help with the ongoing bid on the line.
Anchor investors including Abu Dhabi’s International Holding Company and London-listed Jupiter Asset Management have committed to buy 30 percent of the offering before the public share sale begins on Friday. IHC has pledged to invest $400m in the sale.
The sale prompted several financial groups, including Citigroup’s wealth unit, to stop accepting Adani securities as collateral for margin loans, according to one person with direct knowledge of the situation.
Adani Group on Thursday also denied “market rumours” that indicated its cement-making outfits, Ambuja Cements and ACC, had been pledged as collateral as part of the acquisition finance and that the group was under pressure to cover losses due to share prices.
Adani Group debt was also hit by the sell-off, with a dollar bond from Adani Ports due in 2024 falling 20 cents to just below $0.70 on the dollar on Wednesday, while another bond maturing in 2024 from Adani Green Energy fell about 10 cents to $ 0.67 in dollars.