Adani loses Asia’s richest crown as share price deepens to $84 billion

BENGALURU, Feb 1 (Reuters) – Shares in Indian tycoon Gautam Adani’s conglomerate plunged again on Wednesday as a rout in his companies rose to $84 billion in the wake of a U.S. short-selling report and the billionaire also lost his title as Asia’s richest person.

Wednesday̵[ads1]7;s share loss saw Adani drop to 15th on the Forbes rich list with an estimated net worth of $76.8 billion, below rival Mukesh Ambani, the chairman of Reliance Industries Ltd ( RELI.NS ) who ranks ninth with a net worth of 83.6 billion dollars.

Before the critical report by US short seller Hindenburg, Adani had ranked third.

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

It comes just a day after the group managed to rally support from investors for a $2.5 billion share sale of flagship firm Adani Enterprises on Tuesday, in what some saw as a stamp of investor confidence.

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

The group has denied the allegations, saying the short-seller’s tale of stock manipulation has “no basis” and stems from ignorance of Indian law. It has always made the necessary regulatory disclosures, it added.

Shares in Adani Enterprises (ADEL.NS), often described as the incubator of Adani businesses, plunged 30% on Wednesday. Adani Power ( ADAN.NS ) fell 5%, while Adani Total Gas ( ADAG.NS ) fell 10%, down by its daily price limit.

Adani Transmission (ADAI.NS) fell 6% and Adani Ports and Special Economic Zone (APSE.NS) fell 20%.

Adani Total Gas, a joint venture with France’s Total ( TTEF.PA ), has been the biggest casualty in the short sellers report, losing about $27 billion.

“There was a small bounce yesterday after the stock sell-off went through, after looking unlikely at one stage, 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 shares down despite Adani’s rebuttal, it clearly shows some damage to investor sentiment. It will take some time to stabilise,” Baliga added.

INVESTIGATION

Underscoring the nervousness in some circles, Bloomberg reported on Wednesday that Credit Suisse ( CSGN.S ) had stopped accepting bonds from 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 shares.

Credit Suisse had no immediate comment.

Scrutiny of the conglomerate is mounting, and an Australian regulator said Wednesday it would review Hindenburg’s claims to see if further investigations were warranted.

Data also showed that foreign investors sold a net $1.5 billion in Indian stocks after the Hindenburg report – the biggest outflow over four consecutive days since September 30.

Headaches for the Adani Group are expected to continue for some time.

India’s market regulator, which has been looking into deals with the conglomerate, has said it will add Hindenburg’s report to its own preliminary investigation.

State-run Life Insurance Corporation (LIC) ( LIFI.NS ) said on Monday it would seek clarification from Adani’s management on the short-seller report. However, the insurance giant was a key investor in Adani Enterprises’ share sale.

Hindenburg said in its report that it had shorted US bonds and non-India traded derivatives of the Adani Group.

Reporting by Chris Thomas in Bengaluru and Aditi Shah in New Delhi; Additional reporting by Bharath Rajeshwaran and Aditya Kalra; Editing by Edwina Gibbs and Mark Potter

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