Embattled billionaire Gautam Adani said his ports-to-power conglomerate would examine its capital market plans after abruptly pulling his flagship firm’s $2.5 billion domestic stock offering following fraud allegations made by short-seller Hindenburg Research.
(Bloomberg) — Embattled billionaire Gautam Adani said his ports-to-power conglomerate would examine its capital market plans after abruptly pulling his flagship firm’s $2.5 billion domestic stock offering following fraud allegations made by short-seller Hindenburg Research.
“Once the market stabilizes, we will review our capital market strategy,” the 60-year-old tycoon said in a recorded video address to investors released on Thursday. “This decision will not have any impact on our existing operations and future plans. We will continue to focus on timely execution and delivery of projects.”
A crisis in market confidence has engulfed the tycoon’s companies and Adani Enterprises Ltd. bonds plunged to distressed levels in US trading. The company abruptly pulled a record domestic stock offering after Adani Group shares saw a $92 billion market crash in less than a week. Banks either want more collateral for loans, or are scrutinizing the value of the company’s debt to lend against.
Hindenburg Research last week accused the Adani group of “brazen” market manipulation and accounting fraud, setting off an intense selloff in the stocks. The industrialist has repeatedly denied the allegations, with his conglomerate calling the report “bogus,” and threatened legal action.
Read more: Adani in Crisis as Bonds Hit Distressed Levels, Stock Sale Axed
Along with knocking Adani out of his position in the top 10 wealthiest individuals in the world, his conglomerate’s stock meltdown has also cost India its spot among the world’s five biggest equity markets.
Matters escalated Wednesday with a record 28% plunge in Adani Enterprises. It subsequently abandoned its follow-on share sale, even though it was fully subscribed with backing from prominent Indian and Gulf investors.
Citigroup Inc.’s wealth arm has also joined Credit Suisse Group AG in stopping the acceptance of securities of Adani’s group of firms as collateral for margin loans as banks ramp up scrutiny of the Indian tycoon’s finances.
Read more: Citigroup’s Wealth Unit Halts Margin Loans on Adani Securities
“The fundamentals of our company are strong,” Adani said in the video. “Our balance sheet is healthy and assets, robust. Our Ebitda levels and cash flows have been very strong and we have an impeccable track record of fulfilling our debt obligations.”
Eyes are also on what the government of Prime Minister Narendra Modi, widely perceived to have close ties to Adani, might do to help the group given the latter’s importance to the nation’s economy. Hindenburg’s report has also raised questions over India’s corporate governance, while Adani himself has called the report an attack on the country itself.
“It is definitely hurting the sentiment for overall India,” said Brian Freitas, an Auckland-based analyst at Periscope Analytics. “Foreign banks and bond markets will now be cagey to fund Adani so they may have to go to Indian banks or resort to more pledges.”
(Updates to add analyst comment in final paragraph.)
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