Barclays Ties

Barclays’ ties to the group stand out among the many foreign firms that have stepped forward in recent years to assist fund Adani as the billionaire’s empire expanded. These firms include Standard Chartered, Mitsubishi UFJ Financial Group Inc., and Deutsche Bank AG. The UK company was one of the first international bankers to develop connections with Adani in India, and it is the only major bank with its Asia-Pacific headquarter located in the region.

Until the current break, the connection was fruitful. From 2016 to 2021, Barclays arranged the most total bonds for the group, and it has also been one of the most important loan providers, behind Standard Chartered and MUFG. When it comes to mergers advisory, the company has been number one in India for the past 12 months.

Bond placement fees and loans to Adani and other Indian companies, such as Mukesh Ambani’s Reliance Industries Ltd., have helped the bank increase its Asian revenue to more than 5% of its total, up from just 2.5% five years ago, despite slower growth in business for some global rivals in the region.

In an interview with Bloomberg Television in April, C.S. Venkatakrishnan, CEO of Barclays, noted that Adani “seems to have taken quite a lot of steps to improve its own financial position, so that’s good.”

The bank, according to Venkatakrishnan, would maintain its investments in his home country of India.

He remarked, “We have long had a very strong investment-banking presence in India, it has contributed well to us.”

The importance of India to Barclays was highlighted in 2016 when CEO Jes Staley visited with Prime Minister Narendra Modi. Staley was quoted as saying during his trip that the company intended to expand its back office operations in the country in preparation for future expansion there.

Jaideep Khanna, a 22-year veteran of Barclays who was appointed CEO of Asia-Pacific in 2017, is largely responsible for the bank’s impressive growth in India. Khanna manages the division from an eighth-floor office in Mumbai’s Ceejay House, one of the best buildings in India’s financial hub, whereas most Asia bank chiefs are headquartered in Hong Kong or Singapore.

With Khanna at the helm, Barclays has been able to keep strong ties with Adani and the rest of India’s rising corporate titans. Khanna is Adani’s speed-dial banker for significant financial projects, the individuals said, adding that he has a team overseeing the group’s connection.

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According to Khanna’s remarks in a 2021 interview with Bloomberg, Barclays is “probably the only international bank of our size and stature that has the regional CEO based out of India – that gives a sense of how important India is.”

After receiving a $400 million capital infusion two years ago — the largest since it entered the nation in 1990 — Barclays’ local unit was able to take on more exposure in India via loans and credit secured by shares.

India is home to more than 24,000 Barclays employees, making it the company’s largest single location outside of the United Kingdom. That makes it a significant foreign bank employer in India. Last year, India was the fourth most profitable region for Barclays worldwide, after the United Kingdom, the United States, and Ireland. The corporate and private banking sectors in India are more than twice as large as their counterparts in Singapore and Japan.

Barclays, together with Deutsche Bank and Standard Chartered, was a principal banker in Adani’s recent $6.5 billion transaction to acquire Holcim’s cement holdings in India.

In an interview with the Economic Times of India from last year, Jugeshinder “Robbie” Singh, Adani’s CFO, indicated that Barclays was a “trusted sounding board” in regards to the Holcim takeover, giving both financing and merger assistance.

According to data provided by Bloomberg, in the 12 months leading up to April, Barclays’ acquisition propelled them to the top of the rankings for mergers advisory in India, surpassing JPMorgan Chase & Co.

With fewer deals from Adani, the bank must now find alternative ways to make money in India. Since the release of the Hindenburg report, the company has not issued any offshore bonds, and it has been increasing its reliance on loans as a result of the rising cost of capital.

According to a statement sent to Bloomberg by Adani, the bank’s exposure to Adani portfolio companies as of March 31 places it at the seventh spot. No definition of “exposure” was provided.

Barclays’ investment bank has been the primary conduit through which the bank has transacted with Adani, facilitating the sale of bonds and the issuance of loans that are not carried on the bank’s balance sheet and are often sold off. Japanese and Middle Eastern banks are among those with the most direct exposure to Adani’s debt, the people added.

Stocks and bonds issued by Adani have recovered some of their losses since the group acquired an investment from GQG Partners Inc. No evidence of stock-price manipulation, as claimed by the US short seller, was discovered in a preliminary report from an Indian court panel in May.

To further strengthen its financial sheet, the company has repurchased bonds, repaid loans, and is actively selling shares. According to the sources, it has repaid the banks $200 million of the $1 billion mezzanine loan it received to acquire the Holcim properties. The initial loan was funded by Barclays, Deutsche Bank, and Standard Chartered. After certain banks refused to refinance Adani’s request to purchase Holcim, the company repaid a $500 million bridge loan to the original banks in March.

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Shares of Adani Group companies had another bad day on Dalal Street. Since last week, the total market loss has reached over $100 billion. The massive drop has not only hurt billionaire Gautam Adani’s wealth, but it has also made people worry about how it might affect the domestic stock markets as a whole.

The group’s main company, Adani Enterprises, dropped sharply for the second day in a row after the company cancelled its Rs 20,000 crore follow-on public offering (FPO). Investors were surprised when Adani Enterprises pulled its FPO;

Adani vs Hindenburg

The stock prices of companies in the Adani Group fell by a huge amount after US short seller Hindenburg Research released a harsh report accusing the group of stock manipulation, improper use of tax havens, and even money laundering.
Hindenburg said that it has short positions in Adani Group stocks. It also said that it is worried about the company’s growing debt. Adani Group said that the FPO of its flagship company was cancelled because the market was so unstable, but Hindenburg’s report seems to be the real reason.

Adani Group responded to the US short seller’s report with a 413-page rebuttal, but the stocks of the listed companies in the conglomerate are still falling.
The decision to stop the secondary share sale made things worse, and on Thursday, most Adani Group stocks went down. Adani Enterprises fell the most, by 26.70%, and closed at its lowest level since March 2022.

Adani Group is getting more attention.

The withdrawal of the FPO had an effect on more than just the markets. Politicians from the opposition parties called for an investigation into the Adani Group. Reuters said that the Reserve Bank of India has also put the group on its list of things to keep an eye on.

According to the report, the RBI has asked banks for information about their ties to the conglomerate owned by Gautam Adani. Earlier, another report said that the Securities and Exchange Board of India (Sebi) had begun to look into the recent drop in Adani Group stock prices and some of the problems that were brought up in the Hindenburg report.

As of FY23, the brokerage firm CLSA thinks that Indian banks are exposed to about 40% of the Rs 2 lakh crore worth of Adani Group’s debt. Analysts are worried about what this could mean for the Indian financial sector in the long run.

Also, Citigroup’s wealth unit has stopped giving its clients margin loans against Adani Group securities. The news comes a day after Credit Suisse’s lending arm said that bonds issued by Adani Group companies had no value for lending.

Analysts were worried about the bigger picture.
Analysts are worried about Adani Group’s decision to cancel its flagship company’s FPO even though it was fully subscribed and the price of stocks keeps going down.

Nirav Karkera, Head of Research at wealth-tech platform Fisdom, said, “The FPO was crucial to funding capital-intensive growth projects in key areas like green hydrogen, greenfield motorway construction, and more development work in select airport projects.”

“A portion of the money was set aside to pay off Rs 4,000 crore worth of debt. “The withdrawal of the FPO has not only sped up the need for the money needed to pay off the debt, but it is also likely to slow the growth of businesses that were supposed to start up in the morning,” Karkera said.
“The company seems confident that it will be able to run planned operations and pay off upcoming debt obligations with money from internal accruals. However, it is almost certain that the group will need to slow down its ambitious expansion plan or look for other sources of funding, which would cost more,” he said.

Karkera said, “Market participants seem to be pricing in the fact that the previously estimated growth prospects are being challenged and the likelihood of any upside is at least significantly delayed, if not completely gone in the medium term.”
Ipek Ozkardeskaya, a senior market analyst at Swissquote Bank, told the news agency Reuters that Adani ma;y have caused a “confidence crisis” in Indian shares, which could have effects on the market as a whole.

Also read:- Adani : How the billionaire’s empire lost $100 billion in only a few days

Other companies in the Adani Group also lost 10% of their value. These companies were Adani Total Gas, Adani Green Energy, and Adani Transmission. Adani Ports and SEZ dropped by almost 7%.

Since the Hindenburg report came out, the market value of Adani Group companies has dropped by almost half. Adani Enterprises alone has lost $26 billion in market value since the report came out.

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The Hindenburg report accusing the Gautam Adani-led Adani Group of stock manipulation was referred to as “maliciously nasty and unresearched” and the Adani Group said it was seeking corrective and legal action against it.

After the business conglomerate Adani Group declared it would pursue “remedial and punitive action” against it over claims of unlawful use of offshore tax havens, investment research firm Hindenburg retaliated against Gautam Adani-led Adani Group.

Adani hasn’t addressed a single significant issue we mentioned in the 36 years since we published the report, we claim. The company released a statement on its Twitter account that read, “At the end of our study, we asked 88 basic questions that we believe provide the company a chance to be truthful.”

After the business conglomerate Adani Group declared it would pursue “remedial and punitive action” against it over claims of unlawful use of offshore tax havens, investment research firm Hindenburg retaliated against Gautam Adani-led Adani Group.

Adani hasn’t addressed a single significant issue we mentioned in the 36 years since we published the report, we claim. The company released a statement on its Twitter account that read, “At the end of our study, we asked 88 basic questions that we believe provide the company a chance to be truthful.”

The investment company asserted that any legal action taken against it would be “meritless” and that it stands behind the report. The Adani Group was dared by Hindenburg to bring a lawsuit in the US, where it operates.

Where’s the popcorn?

Hindenburg defends report on Adani Group, says any action will be ‘meritless’https://t.co/WH4NA98bmY

— परितोष पप्पू #DontLetHateWin #डरो मत (@paritoshZero) January 26, 2023

In its analysis, the financial research firm said that over many years, Adani Group participated in blatant stock manipulation and accounting fraud. The report was made public as the corporate giant began a follow-on share sale worth 20,000 crore, according to PTI.

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The investigation listed a number of tax havens in the Caribbean, Mauritius, and the UAE where the Adani family reportedly controlled offshore shell companies that were allegedly used to “enable corruption, money laundering, and taxpayer theft.”

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In a filing with the government, Group said that Hindenburg Research published the report without contacting them or checking the facts. “The report is a malicious mix of selectively false information and old, unfounded, and discredited claims that India’s highest courts have already tested and found to be false,” said Jugeshinder Singh, Group CFO of Adani.

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Share price movement

On January 25, shares of Adani Enterprises fell 1.54% to Rs 3,389.85. Adani Green Energy, Adani Ports and Special Economic Zone, Adani Power, Adani Total Gas, Adani Transmission, and Adani Wilmar all dropped between 5% and 9%. Recent companies that Adani bought, such as ACC, Ambuja Cements, and NDTV, also went down by 7.26%, 7.71%, and 4.988%, respectively.

Hindenburg Research’s report came out at the same time that Adani Enterprises was getting ready to start its Rs 20,000-crore follow-on public offer on Friday.

Kranthi Bathini, Equity Strategist at WealthMills Securities, who keeps an eye on the market, said, “The timing of this report is questionable. The things in this report aren’t proven, and none of them have happened recently. However, the fact that this report came out around the same time that the company was trying to raise money makes people suspicious.”

What did the Hindenburg report say about adani?

The Hindenburg Research report, which came out on January 24, 2023, said that Adani Group had been “involved for decades in a brazen stock manipulation and accounting fraud scheme.”

Hindenburg said that the results of its “two-year investigations” showed that companies owned by the Gautam conglomerate “have taken on substantial debt, including pledging shares of their inflated stock for loans, putting the whole group on a precarious financial footing.”

The report also said that the seven key listed companies of Group have a “85 percent downside based on fundamentals alone” because their prices are so high. The report also said that the group had committed fraud and manipulated the stock market.

NEW FROM US:

Adani Group – How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate Historyhttps://t.co/JkZFt60V7f

(1/x)

— Hindenburg Research (@HindenburgRes) January 25, 2023

How Adani Group responded?

Hindenburg Research made claims in its report, and Adani Group put out a statement to deny them. The group also didn’t like that the report came out just days before the Adani Enterprises FPO.

The Group CFO Jugeshinder Singh said, “We are shocked that Hindenburg Research published a report on January 24, 2023, without trying to contact us or check the fact matrix.”

“The report is a malicious mix of selectively false information and old, false, and discredited claims that India’s highest courts have tested and found to be false,” he said.

What’s next

Bathini told people who had already invested to keep their positions. Nikhil Gangil, who started Intrinsic Value Equity Advisors, said, “At current prices, I wouldn’t buy Group stocks. Hindenburg is a short-seller, which is important to know. For a research report, it’s clear that it has a plan. But some of the things the report said were true were already being talked about among investors.”

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