March 28, 2023

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Adani Rout Erases Half of Group Value Since Hindenburg Report

2 min read

(Bloomberg) — Pressure mounted for Indian billionaire Gautam Adani to quickly address concerns over his conglomerate’s financial health as a brutal stock rout wiped out more than half of the value of his companies.

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About $125 billion evaporated in the market capitalization of his group’s 10 stocks since the US-based Hindenburg Research last week claimed that offshore shell entities were used to inflate Adani Group’s revenues and manipulate stock prices. Flagship Adani Enterprises Ltd. sank a record 35% intraday, taking its decline to 70% in seven trading sessions.

The continued slump reflects worries about Adani’s access to funding after the tycoon scrapped a key stock offering this week, and as long-held concerns about the group’s debt load were propelled onto the global stage by Hindenburg. The embattled tycoon is in talks with creditors to prepay some loans backed by pledged shares, as some banks stopped accepting the securities of the group that spans from ports to energy as collateral in client trades.

“Investors are not just interested in clearing pledges, they want concrete plans and actions,” said Sameer Kalra, founder of Target Investing in Mumbai. “The use of every rupee on balance sheet is critical now. There are a lot of stakeholders.”

The crisis of confidence in Adani has become a national issue with opposition lawmakers disrupting parliament on Thursday to demand answers from Prime Minister Narendra Modi’s government, given how closely his interests are intertwined with the nation’s growth plans. Government officials have sought to downplay the impact.

Hindenburg Research last week accused the Adani group of “brazen” market manipulation and accounting fraud, claiming that a web of Adani-family controlled offshore shell entities in tax havens were used to facilitate corruption, money laundering and taxpayer theft.

The conglomerate has repeatedly denied the allegations, called the report…

2023-02-03 00:31:08

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