Speaking on Thursday about the canceled $2.5 billion IPO of his flagship company, Gautam Adani promised a review of the Adani Group’s market strategy in his first public statements since US-based short seller Hindenburg Research accused the Indian conglomerate to have engaged in stock manipulation and fraud.
in one Video Speaking to investors, Adani said the decision to withdraw his flagship company’s follow-up offering was made due to “market volatility,” adding that it would have been “morally unacceptable” to proceed in the circumstances.
The billionaire said his group will review its capital markets strategy after “the market stabilizes.”
Adani added that the decision would have no impact on the conglomerate’s existing operations and future plans, adding that the company’s earnings and cash flows are “very strong” and “we have an impeccable track record of meeting our debt obligations.” .
The billionaire did not directly address the allegations made by Hindenburg last week that led to his companies being taken public.
The address appears to have done very little to calm the market as shares in flagship Adani Enterprises fell another 25% on Thursday afternoon.
All other listed companies in the Adani group were also down, with some of them hitting their circuit floor for the day.
According to our estimates, Gautam Adani’s current net worth is $65.3 billion — down another $9.4 billion as recently as Thursday. Adani’s fortune has shrunk by $61 billion since Hindenburg’s allegations against his companies became public. He is currently the 16th richest person in the world, up from third place last week.
The matter spilled over to India’s parliament on Thursday, with both chambers briefly adjourned as opposition parties called for an investigation into public sector financial institutions’ exposure to Adani Group companies. Mallikarjun Kharge, the opposition leader in the upper house of parliament, called for a debate on the issue and called for the establishment of a Joint Parliamentary Committee (JPC) to conduct an inquiry. Opposition lawmakers have criticized Prime Minister Narendra Modi and his party for their silence on the issue, with many targeting Adani’s close ties to Modi.
Opposition lawmaker Mahua Moitra — a longtime critic of Adani — blasted the company for its canceled FPO by citing a forbes Wednesday report. she tweeted: “Too expensive to buy your own shares for ₹3200 when you can buy them in the market for ₹2000! ‘Joke is on us’. Keep fooling [Securities and Exchange Board of India] & do not provide any source of funds. Rampant market manipulation doesn’t make you ‘stand by your investors’.”
According to a Bloomberg report, Citigroup has stopped accepting Adani Group securities as collateral for margin loans and is said to be the second global financial institution to do so after Credit Suisse. The Bloomberg report cites an internal memo citing the “dramatic fall in the price of securities issued by Adani” as the reason for the decision to assign a zero MTV to its securities. On Wednesday, Bloomberg reported that Credit Suisse made a similar decision on assigning zero value to bonds issued by three Adani Group companies.
Late last month, US-based activist investor Hindenburg Research disclosed a short position against the Adani group and released a report accusing the conglomerate of engaging in “brazen stock manipulation and accounting fraud schemes” over the decades . The company has vehemently denied the allegations, calling them “maliciously impish” and calling them an attack on India and its economy.
Evidence suggests Adani Group likely bought into its own $2.5 billion stock sale (Forbes)
Adani Enterprises Cancels $2.5 Billion Stock Sale Amid Fraud Allegations (Forbes)
Adani uses Indian nationalist fervor to save his empire – while slipping down the billionaire ranks (Forbes)