NEW DELHI (Reuters) – Gautam Adani faces a critical day on Monday with his flagship company’s second $2.5 billion auction day, eclipsed by a $48 billion rout in the Indian billionaire’s shares that was triggered by a report from a US short seller.
Seven listed companies belonging to the Adani conglomerate, which is run by Asia’s richest man, saw their value plummet after Hindenburg Research’s report last week flagged concerns about high debt levels and the use of tax havens.
The Adani Group called the report unsubstantiated and said it was considering taking action against Hindenburg.
For Adani, 60, the stock market crash was a dramatic setback for a school dropout who rose rapidly in recent years to become the world’s third-richest man, before slipping to seventh on the Forbes list. last week.
The secondary sale of shares by Adani Enterprises opened to retail and institutional investors on Friday but saw only 1% subscriptions as the company’s stock fell 11% below the minimum offering price.
The Adani Group told Reuters in a statement on Saturday that the sale remained on schedule at the expected issue price, although sources said bankers at the country’s largest secondary stock sale were considering extending the deadline. beyond January 31 or to adjust the price due to a fall in its share price.
“It’s important for the Adani Group to make sure that the sale of the shares goes through. If they stick to the price and don’t reduce it, and the stock doesn’t rebound, no one will want to apply,” said Mumbai-based market analyst, Ambareesh Baliga, who advises various family offices.
“Monday’s trade will be critical.”
‘FREE FALL’
Some Adani Group shares have jumped more than 1,500% in the past three years amid aggressive expansion into businesses such as ports, power generation, airports and mining.
Adani Enterprises has set a floor price of 3,112 rupees per share and a cap of 3,276 rupees for the secondary sale of shares – well above their close of 2,761.45 rupees on Friday.
Arun Kejriwal, founder of Kejriwal Research & Investment, said investors would likely wait until the last day of stock sales to see if the price range changed.
“I expect Friday’s freefall to ease, but getting back to a level before that freefall could be difficult,” he added.
Indian regulations state that the share offering must receive a minimum subscription of 90%, and if not, the issuer must repay the full amount.
Maybank Securities and Abu Dhabi Investment Authority are among the investors who bid for the main part of the issue.
On Saturday, index provider MSCI said it was seeking market participants’ comments on Adani and monitoring factors that “could affect the eligibility of these affected securities” in the MSCI indices.
There are at least six Adani Group companies in the MSCI India Index, with an aggregate weighting of 4.31%.
(Reporting by Aditya Kalra, Ira Dugal, Jayshree P Upadhyay and Chris Thomas; Editing by Alexander Smith)