Adani Crisis Deepens as Stock Rout Hits $108 Billion

Feb 2, 2023 thejournalbiz

Adani Crisis Deepens as Stock Rout Hits $108 Billion!

Gautam Adani’s businesses have lost $108 billion in a week, one of the biggest wipeouts in India’s history, after the report by short-seller Hindenburg Research forced him to pull a stock sale at the 11th hour and led some lenders to reject his securities as collateral for client trades.

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Adani Crisis continues!
India's conglomerate lost $108 billion in a week!
The biggest wipeouts in India’s history, after an explosive report by Hindenburg Research, emerged#Adani #HindenburgReport pic.twitter.com/fKTdZNigtr

— The_Journalbiz (@the_journalbiz) February 2, 2023

Bloomberg chart on Adani plunge in market

Adani, who last year became the world’s second-richest man with a $147 billion fortune, has seen his own personal wealth plummet by around $57 billion since Hindenburg accused his companies of fraud to inflate revenue and stock prices. After drawing money from the Middle East and other Indian billionaires to shore up a $2.4 billion share sale, he then abruptly pulled it late Wednesday.

The big worry looming over the conglomerate is that lenders and other counterparties start to pare their exposure, while contagion fears spread to other parts of the markets.

While Adani’s company has rebutted the claims and the billionaire himself said in a video speech on Thursday that the scrapped equity offering will have no impact on operations, the selloff shows no signs of abating. The flagship Adani Enterprises Ltd. sank 27% on Thursday, adding to a 28% tumble in the previous session.

Abu Dhabi’s International Holding Co., which invested about $400 million in the Adani share sale, said on Thursday that its funds had been returned after the deal was pulled.

But, in a sign of how risk perceptions are rapidly changing, units of Credit Suisse Group AG and Citigroup Inc. have stopped accepting some securities issued by Adani’s companies as collateral for margin loans to wealthy clients.

“The biggest risk is if Adani Group faces a severe deterioration in access to financing, particularly at its highly leveraged entities,” Leonard Law, a senior credit analyst at Lucror Analytics, wrote in a note. “That said, the group can likely continue to raise funds from onshore banks and bonds for now.”

Hindenburg Research last week accused the Adani group of “brazen” market manipulation and accounting fraud, claiming that a web of Adani family-controlled offshore shell entities in tax havens were used to facilitate corruption, money laundering, and taxpayer theft.

*The conglomerate has repeatedly denied the allegations, called the report “bogus,” and threatened legal action.