India: Adani Firms Lose $65B From Market Value

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Facts

  • Shares of India's Adani firms — led by Asia's richest man Gautam Adani — sank between 5% and 20% on Monday, wiping out approximately $65B off its market value.
  • Flagship Adani Enterprises' $2.5B secondary share sale closed at ₹2,892.85 ($35.47), 7% below the ₹3,112 ($38.17) lower end of the offer price band due to weakened sentiment among investors.
  • However, after Abu Dhabi conglomerate IHC announced it would invest $381.17M in Adani Enterprises' follow-on public offer worth $2.5B, shares gained 5.26%. However, entities including Adani Total Gas, Adani Green, Adani Transmission, Adani Wilmar, and Adani Power extended their fall.
  • Adani now occupies the eighth spot with a total net worth of $89.1B, per the Forbes real-time billionaires list.
  • The crash follows a report by US short-seller Hindenburg Research last week, which flagged concerns about Adani firms' mounting debts, stock manipulation, improper use of tax havens, and money laundering.
  • Adani suggested the report is a 'malicious combination of selective misinformation and concealed facts to drive an ulterior motive,' while Hindenburg alleges 'India's future is being held back' by the firm's alleged corruption.

Sources: Reuters, Al Jazeera, Reuters, Forbes, Hindenburgresearch and Barandbench.

Narratives

  • Narrative A, as provided by Bloomberg. Hindenburg is a well-respected research outlet in New York's finance circles. Its reports are usually highly credible and extremely well-researched. Allegations of financial irregularities in one of India's largest conglomerates cannot be brushed under the carpet. Hindenburg's research is just the tip of the iceberg; it's a reminder that many Indian companies may be using the same dirty tactics to cement control, boost their valuation, and fuel their expansion with debt.
  • Narrative B, as provided by Guardian. This is an unwarranted, calculated attack on India and the independence, integrity, and quality of Indian institutions. Hindenburg Research's allegations are nothing short of a calculated securities fraud by a short-seller. Their modus operandi behind the explosive report is working, with Adani firms losing over $65B in market value over three trading days. Public investors lost a great deal by wiping off a large amount of investor wealth, while Hindenburg shamefully made a windfall.