Since Hindenburg Research accused Adani Group of ‘brazen’ stock manipulation, a lot has happened. Here’s a rundown of what happened.
Last week, the Adani group was accused of “brazen” market manipulation and fraud by the US-based short seller Hindenburg Research, causing a huge stock selloff. Gautam Adani has continually disputed the charges, and his firm has referred to the information as “bogus”. Since then, a lot has transpired. Here’s a rundown of what happened.
January 24-31
According to a study released on January 24 by Hindenburg Research, seven listed Adani Group entities have an 85% downside on a fundamental basis due to extraordinarily high valuations. The audit accused tax havens of illicit use and raised worries about debt levels.
The following day, Adani Group firms witnessed a major stock market correction that lowered their market capitalization by almost 1 lakh crore.
Adani Group responded to the Hindenburg Research saying that the research was unfounded and dubbed the charges “unsubstantiated suspicions”. Hindenburg, on the other hand, insisted on standing by its report.
Following that, Adani Group stated that it was not an unjustified attack on any one company, but rather a premeditated attack on India “. In its response, Hindenburg stated that, rather than addressing any of the actual issues, Adani “stoked a nationalist narrative” that aims to connect the “meteoric rise and fortune of its chairman, Gautam Adani, with the success of India itself.” “.
As trading resumed, companies in the Adani Group continued to lose money, bringing the two-day decrease in market capitalization to 4 lakh crore.
While the Adani Enterprises FPO received a 1% subscription on the first day, Abu Dhabi’s International Holding committed $400 million to the FPO in support of Adani. The FPO was fully subscribed on January 31.
February 1-3
Credit Suisse’s private bank ceased margin loans on Adani Bonds on February 1. Adani Ports and Special Economic Zone, Adani Green Energy, and Adani Electricity Mumbai notes were assessed a zero lending value by the Swiss lender’s private banking arm.
On the same day, Adani Group stock fell by $86 billion, prompting the Securities and Exchange Board of India (SEBI) to begin an investigation. Adani Group canceled the Adani Enterprises FPO later that night.
Gautam Adani, once known as “India’s richest man,” has been dropped from the list of the world’s top ten richest people. Mukesh Ambani has overcome his competitor and into the top ten list.
On February 2, it was discovered that the State Bank of India (SBI) had lent $2.6 billion to Adani group companies. According to reports, SBI’s exposure included $200 million from its international operations.
Lord Jo Johnson, the younger brother of former British Prime Minister Boris Johnson, has resigned as a non-executive director of the UK-based investment firm Elara Capital, which is linked to the now-defunct Adani Enterprises FPO. Gautam Adani’s three megaprojects in Mumbai have being scrutinized.
S&P Global Ratings altered the outlook for Adani Ports and Adani Electricity from stable to negative on February 3, but keeping the rating. Three Adani group firms, including Adani Enterprises, have been placed under the National Stock Exchange’s short-term additional surveillance measure (ASM) framework as of today (NSE).
LIC disclosed that it owned 4.23% of Adani Enterprises, 9.14% of Adani Ports, and 5.96% of Adani Total Gas.
Nirmala Sitharaman, Finance Minister, reassured investors by describing India as a “very well-regulated financial industry.” The previous level of investor confidence will be maintained. Our regulators are generally very strict about governance measures, so one incident, no matter how widely discussed it is around the world, will not be indicative of how well financial markets are controlled “She stated.
Over $110 billion was wiped away from ten companies affiliated to the Adani Group, including the flagship Adani Enterprises. Adani Group’s share price decline, according to Finance Secretary TV Somanathan, is a “storm in a teacup” from a macroeconomic standpoint.