NEW DELHI: Most Adani Group shares fell sharply on Monday as the Indian conglomerate’s rebuttal of a US short seller’s criticism failed to pacify investors, deepening a market rout that has now led to losses of $65bn in the group’s stock values.
Led by Asia’s richest man Gautam Adani, the Indian group has locked horns with Hindenburg Research and on Sunday hit back at the short seller’s report of last week that flagged concerns about its debt levels and the use of tax havens.
Adani said it complied with all local laws and had made the necessary regulatory disclosures.
Adani Transmission, Adani Total Gas, Adani Green Energy, Adani Power and Adani Wilmar fell between 5 percent and 20 percent on Monday.
Flagship Adani Enterprises, which is facing a crucial test this week with a follow-on share offering, swung between gains and losses before settling 4.8 percent higher. It stayed well below the offer price of the issue, which if successful will be the largest such share offering ever in India.
Adani Enterprises’ $2.5bn secondary share sale closed its second day amid weak investor sentiment. The stock closed at 2,892.85 rupees ($35.47), 7 percent below the 3,112 rupees ($38.17) lower end of the offer price band. The upper band is 3,276 rupees ($40.17).
Data from stock exchanges on Monday showed Adani has now received bids for 1.4 million shares, or just over 3 percent, of the 45.5 million shares on offer. The deal closes on Tuesday.
Foreign and domestic institutional investors, as well as mutual funds, have made no bids so far, according to the data.
“Retail participation is likely to have a shortfall with current market prices still trailing the offer price and sentiment taking a hit due to the Hindenburg controversy,” said Hemang Jani, equity strategist at Motilal Oswal Financial Services.
“While there is a risk that the share sale does not go through, it will be crucial today to wait and see how institutional investors participate.”
Abu Dhabi conglomerate International Holding Company said on Monday that it would invest 1.4 billion dirhams ($381.17m) in the offering.
Share sale on schedule
The Adani Group told Reuters in a statement on Saturday that the sale remained on schedule at the planned issue price, even as sources said bankers of the country’s largest secondary share sale were considering extending the timeline beyond January 31, or tweaking the price due to the fall in its share price.
India’s rules stipulate that the share offering must receive a minimum subscription of 90 percent, and if it does not, the issuer must refund the entire amount. Maybank Securities and Abu Dhabi Investment Authority are among investors who bid for the anchor portion of the issue.
Maybank said in a statement that “there is no financial impact” on it as the subscription to Adani’s offer was fully funded by client funds.
India’s state-run insurance behemoth Life Insurance Corporation (LIC) told Reuters on Monday that it was reviewing the Adani Group’s response to Hindenburg’s report and would hold talks with the management within days.