Under attack from short sellers, India’s Adani launches $2.45 billion share sale
MUMBAI (Reuters) – India’s Adani Enterprises Ltd launched a $2.45 billion secondary share sale to retail investors on Friday, days after the Adani Group – controlled by one of the world’s richest men – was hit by a short seller.
Adani Group companies lost $11 billion in market capitalization on Wednesday after New York-based Hindenburg Research raised concerns in a report about debt levels and the use of tax havens. The Adani Group dismissed the report as baseless.
Media statement – II on a report published by Hindenburg Research pic.twitter.com/Yd2ufHUNRX
— Adani Group (@AdaniOnline) January 26, 2023
Adani Enterprises, the flagship of a conglomerate headed by the world’s fourth-richest man Gautam Adani, aims to use the proceeds from the share sale to pay down capital expenditure and debt. Wednesday saw the participation of investors including the Abu Dhabi Investment Authority.
The auction for retail investors started on Friday and will end on January 31. The company has set a floor price of Rs 3,112 ($38.22) and a ceiling of Rs 3,276 per share.
Shares of Adani Enterprises fell nearly 6% to 3,189.55 rupees in early Mumbai trading on Friday – their lowest since mid-October. Indian markets were closed on Thursday.
Hindenburg said in its report that it has “significant debt” to listed Adani group companies. % beyond the actual value.
Hindenburg said it held short positions in Adani through its U.S.-traded bonds and Indian non-traded derivatives, betting that their prices will fall.
The Adani Group has repeatedly dismissed concerns over debt levels. It defended itself in a presentation titled “Myths of the Short Seller” on Thursday, saying promoters – or key stakeholders – are in a “high growth phase”.
“I don’t see much of an effect from the Hindenburg report,” Samrat Dasgupta, chief executive of Esquire Capital Investment Advisors, told Reuters. The stock sale “must be successful.”
Jefferies said in a client note that Adani Group shared details of credit and foreign exchange positions and “does not see any material risk to the Indian banking sector”.
Adani Group’s combined total debt is 1.9 trillion rupees ($23.34 billion), Jefferies said.
Adani has said its debt is manageable and no investors have raised any concerns.
(Reporting by M. Sriram and Chris Thomas; Editing by Aditya Kalra, Christopher Cushing and Kim Coghill)