NEW DELHI (Reuters) – Gautam Adani faces a critical day on Monday as the second day of bidding for his flagship company’s $2.5 billion share sale was overshadowed by a $48 billion rout in the Indian billionaire’s shares. it was triggered by a report from a US short seller.
Seven listed companies belonging to the Adani conglomerate, led by Asia’s richest man, saw their values plunge sharply after last week’s Hindenburg Research report signaled concerns about high levels of debt and the use of tax havens.
Adani Group called the report unfounded and said it was considering taking action against Hindenburg.
For Adani, 60, the stock market crash was a dramatic setback for a school dropout who rose rapidly in recent years to become the third richest man in the world, before slipping to seventh on the list of Forbes last week.
The secondary stock sale of Adani Enterprises opened on Friday to retail and institutional investors but saw just 1% subscriptions as the company’s shares fell 11% below the minimum bid price.
Adani Group told Reuters in a statement on Saturday that the sale remains on schedule at the planned issue price, though sources said the bankers of the country’s largest secondary stock sale were considering extending the timeline beyond the January 31 or to change the price due to the decline in its share price.
“It is important for Adani Group to ensure that the sale of the shares goes through. If they stick to the price and don’t reduce it, and the shares don’t recover, no one will be willing to apply,” said Mumbai-market analyst , Ambareesh Baliga, who advises various family offices.
“Monday’s operation will be critical.”
Select Adani Group stocks have risen more than 1,500% over the past three years due to aggressive expansion of businesses that include ports, power generation, airports and mining.
Adani Enterprises set a floor price of Rs 3,112 per share and a ceiling of Rs 3,276 for the sale of secondary shares, well above Friday’s close of Rs 2,761.45.
Arun Kejriwal, founder of Kejriwal Research & Investment, said investors will likely wait until the final day of the share sale to see if the price range has changed.
“I expect the free fall seen on Friday to ease, but recovery to a level prior to this drop could be difficult,” he added.
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, index provider MSCI said it was seeking feedback from market participants on Adani and was monitoring factors that “may affect the suitability of such relevant stocks” in the MSCI indices.
There are at least six Adani Group companies in the MSCI India index, with a cumulative weight of 4.31%.
(Reporting by Aditya Kalra, Ira Dugal, Jayshree P Upadhyay and Chris Thomas; Editing by Alexander Smith)