The seven publicly traded stocks of the Adani Group, led by billionaire Gautam Adani, have experienced a market value decline of approximately $120 billion since Hindenburg Research published a report on January 24. The report made accusations of stock manipulation and improper use of offshore tax havens against the group, which they have denied.
Key Points:
- Adani group has informed investors that major banks from Japan and Europe have reasserted their trust in the company, following a damaging report by a U.S. short seller.
- The group has denied the allegations made in the report by Hindenburg Research, which accused the company of utilizing offshore tax havens and stock manipulation.
- Adani’s shares and bonds have recovered some of their lost value after the company paid off some debt and secured a $1.9 billion investment from GQG Partners.
- Adani is facing an inquiry by India’s market regulator into the allegations made by Hindenburg and the group’s related party transactions.
- The company conducted roadshows for fixed income investors from Hong Kong to New York, where it pledged to achieve a 20% year-on-year growth in core earnings and diversify its debt portfolio.
- Global banks including MUFG, SMBC, Mizuho, Standard Chartered, Barclays, Deutsche Bank, and consortium lender banks have reaffirmed their confidence in the Adani group, according to the document.
- The conglomerate has cited business relationships with some of these banks as evidence of its strength to counter Hindenburg’s allegations.
- Adani group did not provide any comment in response to the request, while Barclays PLC declined to comment.
- Mitsubishi UFJ Financial Group Inc (MUFG), Sumitomo Mitsui Financial Group Inc’s SMBC unit, Mizuho Financial Group, Standard Chartered and Deutsche Bank did not provide an immediate response.
Details of Adani Group Investor:
According to a document from the company, the Adani group informed investors that multiple major Japanese and European banks have reasserted their trust in the troubled conglomerate, following a scathing report from a U.S. short seller.
Since a report by Hindenburg Research on January 24 accused Adani group, led by billionaire Gautam Adani, of utilizing offshore tax havens and stock manipulation, the group’s seven listed stocks have lost approximately $120 billion in market value. However, the group has denied these allegations.
After paying off some debt and securing a $1.9 billion investment from boutique investment firm GQG Partners, Adani group’s shares and bonds have managed to recover some of their lost value in the past month or so.
However, Adani is currently facing an inquiry by India’s market regulator, which is investigating the allegations made by Hindenburg as well as the group’s related party transactions following a directive from the Supreme Court.
According to the document, the Adani group conducted a series of roadshows for fixed income investors from Hong Kong to New York in recent weeks, where it pledged to achieve a 20% year-on-year growth in core earnings and diversify its debt portfolio.
The document, reviewed by Reuters, aimed to reassure investors by stating that global banks including “MUFG, SMBC, Mizuho, Standard Chartered, Barclays, DBank (Deutsche Bank), consortium lender banks” have reaffirmed their confidence in the Adani group. However, the document did not provide further details on how the banks expressed their continued support.
The conglomerate has previously cited business relationships with some of the banks as evidence of its strength to counter Hindenburg’s allegations. Adani group did not provide any comment in response to the request, while Barclays PLC declined to comment.
Mitsubishi UFJ Financial Group Inc (MUFG), Sumitomo Mitsui Financial Group Inc’s SMBC unit, Mizuho Financial Group, Standard Chartered and Deutsche Bank did not provide an immediate response.
CONCERNS ABOUT DEBT:
Following the Hindenburg report, investors became worried about the banks’ exposure to the Adani group. In a report published on January 26, brokerage CLSA estimated that the top five Adani group companies had a consolidated debt of $25.56 billion, with Indian banks comprising 38% of that figure, which may have contributed to the concern. The company’s document stated that the group has consistently diversified its long-term debt portfolio and reduced its dependence on banks by using alternative sources of capital.
According to the Adani document, 39% of the group’s current debt is in the form of bonds, while 29% comes from global banks and 32% from public or private banks in India.
As a result of the market turbulence following the Hindenburg report, Adani was compelled to cancel a $2.5 billion share sale, in which the short-seller raised many concerns about Adani’s debt levels.
According to the document, the State Bank of India (SBI) and other public sector lenders have expressed confidence in Adani’s financial position, raising no concerns, and reaffirming their commitment to lending to the conglomerate.
SBI did not respond to a request for comment.
About Company:
Adani Group is an Indian multinational conglomerate, headquartered in Ahmedabad. It was founded by Gautam Adani in 1988 as a commodity trading business, with the flagship company Adani Enterprises. The Group’s diverse businesses include port management, electric power generation and transmission, renewable energy, mining, airport operations, natural gas, food processing and infrastructure.
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