By Chris Thomas and Aditya Kalra
NEW DELHI (Reuters) – Most Adani Group shares extended sharp declines on Monday as a detailed rebuttal to criticism of a US short seller by the Indian conglomerate failed to appease investors whose market losses they have now risen to $65 billion in three days.
The Adani Enterprises flagship, which is facing a crucial test this week with a follow-up stock offering, was up 3%, but was off initial gains by up to 10% and significantly below its offering price.
Adani, led by Asia’s richest man Gautam Adani, has been butting heads with Hindenburg Research and on Sunday responded to last week’s short-seller’s report that signaled concerns about its debt levels and use of havens tax. Adani said it complies with all local laws and has made the necessary regulatory information.
Adani Transmission and Adani Total Gas each tumbled 20% on Monday, while Adani Green Energy fell 16%. Adani Ports and Special Economic Zone lost 1.1%.
Adani Enterprises’ $2.5 billion secondary stock sale entered its second day on weak investor sentiment. The stock traded at Rs 2,848 in early trading, well below the share price range of Rs 3,112-3,276 per share.
On Friday, the first day of the offering, the issue was underwritten at 1% amid a broader drop in shares. Initial data from exchanges on Monday showed Adani has now received bids for 563,156 of the 45.5 million shares, or 1.2%, on offer. Foreign and domestic institutional investors, as well as mutual funds, have not bid in the bid so far, according to the data.
Indian regulations say that the share offering must receive a minimum subscription of 90%, and if not, the issuer must repay the full amount. Maybank Securities and Abu Dhabi Investment Authority are among the investors who have bid for the anchor portion of the issue.
On Saturday, Adani Group told Reuters in a statement that the sale remains on schedule at the planned issue price, although sources said bankers of the country’s largest secondary stock sale were considering extending the timeline further. on January 31 or to change the price due to the decline in its share price.
The Hindenburg report has led to a massive deletion of seven Adani Group listed companies since last week. As of Monday, the group’s seven listed entities have collectively lost $65 billion in market capitalization since the report was released. Adani Total Gas lost the most, with $21 billion.
In response to Adani’s rebuttal on Monday, Hindenburg said “the response largely confirmed our findings and ignored our key questions.”
The stock market crash was a dramatic setback for 60-year-old Adani, a high school dropout who rose rapidly to become the world’s third richest man in recent years, before slipping to eighth on the Forbes list. .
Hindenburg’s report said five of seven major Adani listed companies reported current ratios, a measure of liquid assets minus short-term liabilities, below 1, suggesting “an increase in short-term liquidity risk.”
It said major Adani-listed companies had “substantial debt” which placed the entire group on a “precarious financial footing” and that shares of seven Adani-listed companies are down 85% due to those it has termed “super-high ratings”.
Adani’s response on Sunday said that his group companies have “consistently deleveraged” over the past decade.
(Reporting by Chris Thomas and Aditya Kalra; Additional reporting by Gaurav Dogra; Editing by Muralikumar Anantharaman)