Indian billionaire Adana’s companies lost $100 billion in value in a week
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Companies belonging to Indian billionaire Gautam Adani’s Adani Group have lost $100 billion in capitalization in a week, writes the Financial Times. Shares of all 10 subsidiaries of Adani fell in Mumbai trading, shares of Adani Enterprises, Adani Transmission and Adani Ports fell by 10%.
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The reason for the fall in capitalization
This happened after Adani canceled the previously announced additional issue of shares (Follow-on Public Offering, FPO) for $2.5 billion.
In a video appeal to investors, Adani explained that, in the opinion of the board of directors, it would be “wrong from a moral point of view” to conduct an FPO in conditions of “market volatility”. At the same time, he assured that the decision “will not have any influence on our current activities and plans”, and “as soon as the market stabilizes, we will review our strategy on the capital market”.
Adani decided to cancel the additional placement and return money to investors on Wednesday after Adani Enterprises shares fell to 2,179.75 rupees ($27), well below the FPO’s minimum price of 3,112 rupees, the FT said. In just one week, the shares of Adani Group lost more than 8.4 billion rupees in capitalization, the newspaper writes.
Read also: Bloomberg excluded Adani from the list of the 10 richest people in the world
What is happening with shares
Adani’s shares are falling in price due to a mass sale: investors began to get rid of the conglomerate’s shares after the release of a report by Hindenburg Research, a research company specializing in short sales.
Shortly after the announcement of the FPO, on January 24, Hindenburg Research published a report detailing alleged numerous corporate abuses at Adana’s companies.
Adani Group called the report “a malicious combination of selective disinformation and outdated, baseless and discredited assertions” aimed at “undermining reputation” and damaging demand for shares. In a 413-page rebuttal, Adani Group considered the accusations against it not “just an unfounded attack on a specific company, but a deliberate attack on India” and its growth history. In response, Hindenburg Research accused the Adani Group of covering itself with the Indian flag, “systematically robbing the nation.”
Read also: The value of India’s richest man’s companies fell by $72 billion in 3 days
The scandal affected Gautam Adana himself, who before the release of the Hindenburg Research report was the richest businessman in Asia and ranked third in the Forbes world ranking.
Since then, the billionaire’s fortune has decreased by more than $60 billion, he ceased to be the richest man in Asia and dropped to the 16th place in the global ranking.
According to Forbes Real-Time, Adana’s capital decreased by another $22.4 billion during the day and is now estimated at $66.3 billion.
Author: 
News feed editor Anna Nedogybchenko. She writes on the following topics: Finance, banks, economy, investments
- Shares (securities)
Source: Ministry of Finance
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