Gautam Adani faces a crucial day on Monday with his flagship company’s $2.5 billion share sale’s second day of bidding dwarfed by a $48 billion rout in the Indian billionaire’s stocks which was stoked by a U.S. short seller’s report.
Seven listed firms owned by the Adani conglomerate, which is led by Asia’s wealthiest man, saw steep falls in their values after the Hindenburg Research report last week pointed out concerns about high debt levels and the use of tax havens.
Adani Group issued a comprehensive response late on Sunday, saying it adheres to all local laws and had made necessary regulatory disclosures. It has labeled the report baseless and said it was contemplating taking action against Hindenburg.
For 60-year-old Adani, the stock market meltdown has been a significant setback for a school dropout who rose quickly in recent years to become the world’s third wealthiest man, before falling to rank seventh on the Forbes list last week.
The secondary share sale by Adani Enterprises (ADEL.NS) opened for institutional and retail investors on Friday, but saw only 1% subscriptions as the company’s stock plunged 11 percent below the minimum offer price.
Adani Group told Reuters in a statement on Saturday that the sale stays on schedule at the planned issue price, even as sources said bankers on the country’s biggest secondary share sale were considering prolonging the timeline beyond Jan. 31, or tweaking the price because of the drop in its share price.
“It is important for the Adani Group to ensure the share sale goes through — If they stick to the price and don’t reduce it, and the stock doesn’t bounce back, nobody will be keen to apply,” said a Mumbai-based market analyst, Ambareesh Baliga, who advises various family offices.
“Monday’s trade will be critical.”
In another statement on Sunday, Adani Group’s chief financial officer Jugeshinder Singh said it is concentrating on the share sale and is bullish it will sail through. He also said its anchor investors have shown optimism and remain invested.
‘Free Fall’
Some Adani Group stocks have jumped more than 1,500% in the last three years amid exponential growth in businesses that include mining, ports, airports, and power generation.
Adani Enterprises has fixed a floor price of 3,112 rupees per share and a cap of 3,276 rupees for the secondary share sale – well over their close of 2,761.45 rupees on Friday.
Arun Kejriwal, founder of Kejriwal Research & Investment, said investors were expected to wait until the final day of the share sale to see if the price band is tweaked.
“I expect that the free fall seen of Friday may abate but recovery back towards a level prior to this fall may be difficult,” he added.
Indian regulations say the share offering must get a minimum subscription of 90%, and if it does not the issuer must return the whole amount. Abu Dhabi Investment Authority and Maybank Securities are some of the investors who bid for the anchor portion of the issue.
On Saturday, index provider MSCI said it was soliciting views from market participants on Adani and was tracking the factors that “may impact the eligibility of those relevant securities” in MSCI indexes.
There are at least six Adani Group firms in the MSCI India Index, with a collective weight of 4.31%.
