BENGALURU, Feb 1 (Reuters) – Shares in Indian tycoon Gautam Adani’s conglomerate fell again on Wednesday as a routine in his companies rose to $84 billion following a report by a U.S. short seller, and the billionaire lost his title as the also richest in Asia. a person
Wednesday’s stock losses saw Adani slip to 15th on the Forbes rich list with an estimated net worth of $76.8 billion, below rival Mukesh Ambani, chairman of Reliance Industries Ltd ( RELI.NS ) who is in ninth place with a net worth of $83.6 billion.
Before the critical report from US short seller Hindenburg, Adani was in third place.
The losses represent a dramatic setback for Adani, the school billionaire whose business interests stretch from ports and airports to mining and cement. Now, the tycoon is fighting to stabilize his business and protect his reputation.
It comes just days after the group gathered investor support for a $2.5 billion share sale to flagship firm Adani Enterprises on Tuesday, which some saw as a stamp of investor confidence.
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A Hindenburg Research report last week alleged improper use by the Adani Group of offshore tax havens and stock manipulation. He also raised concerns about the high debt and valuations of Adani’s seven listed companies.
The group denied the allegations, saying the short-seller’s story of stock manipulation has “no basis” and stems from ignorance of Indian law. He always completed the required regulatory disclosures, he said.
Shares in Adani Enterprises (ADEL.NS), often called Adani’s business incubator, fell 30% on Wednesday. Adani Power (ADAN.NS) fell 5%, while Adani Total Gas (ADAG.NS) fell 10%, down below its daily price limit.
Adani Transmission (ADAI.NS) fell 6% while Adani Ports and Special Economic Zone (APSE.NS) fell 20%.
Adani Total Gas, a joint venture with France’s Total (TTEF.PA), is the biggest casualty in the short seller’s report, losing about $27 billion.
“There was a slight bounce yesterday after the share sell-off went through, after it was unbelievable at a certain point, but now the weak market sentiment is visible again after the Hindenburg bombshell report,” said Ambareesh Baliga, an independent market analyst who based in Mumbai.
“With the stocks down despite Adani’s rebuttal, it clearly shows some damage to investor sentiment. It will take some time to stabilise,” said Baliga.
Underscoring the nervousness in some quarters, Bloomberg reported on Wednesday that Credit Suisse ( CSGN.S ) has stopped accepting bonds of Adani group companies as collateral for margin loans to its private banking clients.
Deven Choksey, managing director of KRChoksey Shares and Securities, said this was a major factor in Wednesday’s share slide.
Credit Suisse had no immediate comment.
Scrutiny of the conglomerate is intensifying, and Australia’s regulator said on Wednesday it would review Hindenburg’s allegations to see if further investigation was warranted.
Data also showed that foreign investors sold a net worth of $1.5 billion of Indian equities after the Hindenburg report – the largest outflow over four consecutive days since September 30.
Headaches for the Adani Group are expected to continue for some time.
India’s markets regulator, which has been looking into the conglomerate’s markets, has said it will add the Hindenburg report to its own preliminary investigation.
State-run Life Insurance Corporation (LIC) ( LIFI.NS ) said on Monday it would seek clarification from Adani management on the short seller report. The insurance giant, however, was a key investor in the Adani Enterprises share sale.
Hindenburg said in his report that he shorted US bonds and non-India traded derivatives of the Adani Group.
Reporting by Chris Thomas in Bengaluru and Aditi Shah in New Delhi; Additional reporting by Bharath Rajeshwaran and Aditya Kalra; Edited by Edwina Gibbs and Mark Potter
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