Shares of Adani Group’s companies plunged on Friday, extending a selloff that began after US short seller Hindenburg Research said it took a short position in certain securities of the conglomerate and accused firms owned by Asia’s richest man of fraud.
(Bloomberg) — Shares of Adani Group’s companies plunged on Friday, extending a selloff that began after US short seller Hindenburg Research said it took a short position in certain securities of the conglomerate and accused firms owned by Asia’s richest man of fraud.
Billionaire Gautam Adani’s flagship firm Adani Enterprises Ltd. lost as much as 6.2% in early trading in Mumbai. Some group stocks, including Adani Green Energy Ltd. and Adani Transmission Ltd., slumped more than 15%. Friday’s early price action points to a likely bigger rout in group shares after a $12 billion wipeout in market value on Wednesday. Indian markets were shut Thursday.
“It seems like there might be more downside and this report can become a big legal issue as it is causing reputational damage too,” said Sameer Kalra, founder of Target Investing in Mumbai. “If it goes ugly, Adani Ports and Adani Wilmar are less leveraged stocks in terms of the cash flows that they generate.”
Hindenburg issued a report on Jan. 24 making wide-ranging allegations of corporate malpractice following a two-year investigation into the tycoon’s companies. Adani Group is exploring legal action against Hindenburg for its “maliciously mischievous, unresearched” report, Jatin Jalundhwala, legal head for the group, said in a statement earlier in response.
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Companies linked to Adani Group plan a detailed response Friday to the report that they labeled as “bogus,” according to bondholders who joined a conference call with Adani executives. On the call, investors were told that the US-based short seller’s assertions of accounting fraud were “devoid of facts.”
Investors are keenly watching how this week’s events impact the $2.5 billion share sale by Adani Enterprises. The offering already lured a number of anchor investors before the Hindenburg report became news, though retail investors and high net worth individuals can bid for shares starting today through Jan. 31.
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