Saturday, December 2, 2023

Adani losses swell to more than $100 billion

(Al Jazeera Media Network) Adani’s market losses swelled above $100 billion on Thursday, sparking worries about a potential systemic impact a day after the Indian group’s flagship firm abandoned its $2.5-billion stock offering.

The shock withdrawal of Adani Enterprises’s share sale marks a dramatic setback for founder Gautam Adani, the school dropout-turned-billionaire whose fortunes rose rapidly in recent years but have plunged in just a week after a critical research report by United States-based short-seller Hindenburg Research.

Aborting the share sale sent shockwaves across markets, politics and business. Adani stocks plunged, opposition politicians called for a wider probe, and India’s central bank sprang to action to check on the exposure of banks to the group.

Meanwhile, Citigroup’s wealth unit stopped making margin loans to clients against Adani Group securities.

The crisis marks a dramatic turn of fortune for Adani, who has in recent years forged partnerships with foreign giants such as France’s TotalEnergies and attracted investors such as Abu Dhabi’s International Holding Company, as he pursues a global expansion stretching from ports to the power sector.

In a shock move late on Wednesday, Adani called off the share sale as a stocks rout sparked by Hindenburg’s criticisms intensified, despite it being fully subscribed a day earlier.

“Adani may have started a confidence crisis in Indian shares, and that could have broader market implications,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

Adani Enterprises shares tumbled by 27 percent on Thursday, closing at their lowest level since March 2022.

Other group companies lost further ground, with 10 percent losses at Adani Total Gas, Adani Green Energy, and Adani Transmission, while Adani Ports and Special Economic Zone shed nearly 7 percent.

Since Hindenburg’s report on January 24, group companies have lost nearly half their combined market value. Adani Enterprises – described as an incubator of Adani’s businesses – has lost $26 billion in market capitalization.

Adani is also no longer Asia’s richest person, having slid to 16th in the Forbes rankings of the world’s wealthiest people, with his net worth almost halved to $64.6 billion in a week.

The 60-year-old had been third on the list, behind Elon Musk and Bernard Arnault.

His rival Mukesh Ambani of Reliance Industries is now Asia’s richest person.

On Thursday, Bloomberg News reported that Adani was in talks with lenders to prepay and release pledged shares as he seeks to restore confidence in his conglomerate’s financial health.

The move would see lenders release some of the stock in Adani Group companies that was pledged as collateral, Bloomberg reported, citing a person with knowledge of the matter.

The group has not faced margin calls on these pledges and is seeking the prepayment proactively, according to the report.

The key priority is to remove any concern about margin calls, Bloomberg reported, adding that Adani officials will speak with investors in the coming days and will make all payments on time.

 

https://www.aljazeera.com/economy/2023/2/2/indias-adanis-losses-swell-above-100bn

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