Ajit Karn
Since the allegations were made by Hindenburg Research, several financial institutions in New York, London, and Tokyo have analysed their exposure to Gautam Adani, the second-wealthiest individual in the world.
The multibillionaire Gautam Adani is facing the worst corporate crisis of his career. Bloomberg reported that since the Hindenburg Research report on January 24 accusing the Adani Group of stock manipulation and accounting fraud, the company’s market value has decreased by $108 billion.
Since the allegations were made, numerous financial institutions in New York, London, and Tokyo have analysed their exposure to Adani, once the second-wealthiest company in the world.
Worst nightmare for Adani Group:
- Since Hindenburg’s report on January 24, Adani Group companies’ combined market value has decreased by nearly half. The market capitalization of Adani Enterprises, which is described as an incubator for Adani’s businesses, has decreased by $26 billion.
- On Thursday, shares of Adani Enterprises fell 27 percent, closing at their lowest level since March 2022.
- Other group companies also lost ground, with Adani Total Gas losing 10% of its value.
- Adani Green Energy and Adani Transmission, while Adani Ports and Special Economic Zone declined by nearly 7%.
- The turmoil has not only impacted Adani Group’s stock price, but also banks that have extended loans to the company. The State Bank of India has declined 11% since the release of the Hindenburg report.
- According to data compiled by Bloomberg, foreign institutional investors withdrew a net $2 billion from India’s stock market from January 27 through January 31.
- Bloomberg quoted Jian Shi Cortesi, a fund manager at Zurich-based GAM Investments that oversees more than $80 billion in assets, as saying, “The Adani-related headlines are generating a high level of negative attention, which could dampen investor appetite for Indian stocks.”
- While we do not expect Adani to drag down the entire Indian stock market, we believe this could cause India to underperform other Asian markets, such as China, he added.
- Bloomberg also reported that Citigroup’s wealth unit has ceased accepting securities issued by Adani companies as collateral for margin loans after “negative news regarding the group’s financial health” precipitated dramatic price declines. The private banking division of Credit Suisse had also made a similar modification to the bonds.
- The securities division of Mizuho Financial Group Inc. has dealt with Adani in the past and is examining the allegations levelled against the conglomerate, the unit’s CEO Yoshiro Hamamoto told reporters on Thursday in Tokyo. According to public documents, Mizuho Securities oversaw the issuance of debt by Adani companies.
Adani denies the accusations
Although Adani’s company has refuted the allegations and the billionaire himself stated in a Thursday video address that the cancelled equity offering will have no impact on operations, the selloff shows no signs of abating.
The opposition agrees to jointly raise the Adani matter
On Thursday, opposition parties agreed to jointly raise allegations of fraud against the Adani Group in Parliament, but they had yet to reach a consensus on the method of investigation into the Gujarat-based multinational corporation.
Also read this:Adani has lost $100 billion in a week, and Dalal Street is worried.
At a meeting of like-minded political parties convened by Congress president Mallikarjun Kharge, a consensus was reached to vigorously raise the Adani issue in both the Houses and force the government to discuss the Motion of Thanks on the President’s Address beginning on Monday.
