Gautam Adani loses Asia’s richest crown

Adani Group companies’ losses deepened to $86 billion on Wednesday. File pic/AFP

Shares in tycoon Gautam Adani's conglomerate plunged again on Wednesday as a rout in his companies deepened to USD 86 billion in the wake of a US short-seller report, with the billionaire also losing his title as Asia's richest person.

Wednesday's stock losses saw Adani slip to 15th on Forbes rich list with an estimated net worth of USD 75 billion, below rival Mukesh Ambani, the chairman of Reliance Industries Ltd who ranks ninth with a net worth of USD 83.6 billion.

Before the critical report by Hindenburg Research, Adani had ranked third.

Major setback

The losses mark a dramatic setback for Adani, the school-dropout-turned-billionaire whose business interests stretch from ports and airports to mining and cement. Now, the tycoon is fighting to stabilise his businesses and defend his reputation.

Also Read: Interest of my investors is paramount: Gautam Adani after calling off Rs 20,000 crore FPO

Before the report by Hindenburg Research, Gautam Adani had ranked third. File pic/AFP

The share slides come just a day after the Adani Group managed to muster support from investors for a USD 2.5 billion share sale for flagship firm Adani Enterprises, in what some saw as a stamp of investor confidence at a time of crisis.

The report by Hindenburg Research last week alleged improper use by the Adani Group of offshore tax havens and stock manipulation. It also raised concerns about high debt and the valuations of seven listed Adani companies. The group has denied the allegations.

"There was a slight bounce yesterday after the share [FPO] sale went through, after seeming improbable at a point, but now the weak market sentiment has become visible again after the bombshell Hindenburg report," said Ambareesh Baliga, a Mumbai-based independent market analyst.

"With the stocks down despite Adani's rebuttal, it clearly shows some damage on investor sentiment. It will take a while to stabilise," Baliga added.

Underscoring the nervousness in some quarters, Bloomberg reported on Wednesday that Credit Suisse had stopped accepting bonds of Adani group companies as collateral for margin loans to its private banking clients.

Deven Choksey, managing director of KRChoksey Shares and Securities, said this was a big factor in Wednesday's share slides.

SEBI probes share sale

The Securities and Exchange Board of India (SEBI) is examining a recent crash in shares of Adani Group, a source with direct knowledge of the matter told Reuters on Wednesday. The source said SEBI is also looking into any possible price manipulation of Adani Group stocks, as well as examining possible irregularities in the USD 2.5 billion share sale of the flagship firm Adani Enterprises, which concluded on Tuesday.

While the share offering's book building process was covered only 3% on Monday, it was fully subscribed on Tuesday.

Scrutiny in Australia

Scrutiny of the conglomerate is stepping up, with an Australian regulator saying on Wednesday it would review Hindenburg's allegations to see if further enquiries were warranted.

Data also showed that foreign investors sold a net USD 1.5 billion worth of Indian equities after the Hindenburg report--the biggest outflow over four consecutive.

Headaches for the Adani Group are expected to continue for some time. SEBI, which has been looking into deals by the conglomerate, has said it will add Hindenburg's report to its own preliminary investigation.

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