Gautam Adani defends ‘robust’ business as stock losses reach

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Indian billionaire Gautam Adani broke his silence and defended his industrial empire despite a cancelled $2.4bn share sale in the wake of a short-seller attack.

Losses for Adani Group stocks escalated to $100bn on Thursday after the conglomerate’s flagship company called off the equity issue, saying it would “not be morally correct” to proceed given the stock wipeout.

In a video address released shortly before markets opened, founder Adani dismissed concerns about the group’s finances and said the decision not to go ahead with the fundraising for Adani Enterprises would “not have any impact on our existing operations and future plans”.

He said the sale had been halted to protect investors, who would otherwise have faced steep losses because of the plunge in the company’s value since they signed up to the deal.

For me, the interest of my investors is paramount and everything [else] is secondary,” Adani said in the address released by the company. “Hence to insulate the investors from potential losses, we have withdrawn the [sale].”

The group’s chair said that the company’s earnings and cash flows were “very strong” and that it had “an impeccable track record of fulfilling our debt obligations”.

“Our balance sheet is healthy and assets, robust,” Adani said. “Once the market stabilises, we will review our capital market strategy.”

Adani Group stocks have now lost more than Rs8.4tn ($102bn) since short seller Hindenburg Research accused the conglomerate last week of using offshore entities in tax havens to inflate the share prices of its listed companies, allowing them to take on more debt and “putting the entire group on a precarious financial footing”. Adani Group has denied the allegations.

Shares of all 10 listed companies controlled by the conglomerate fell in early trading in Mumbai on Thursday, though some recovered later. Adani Enterprises dropped more than 18 per cent, while both Adani Transmission and Adani Ports fell 10 per cent.

The decision on Wednesday to pull the share sale and refund investors came after shares in Adani Enterprises fell to Rs2,179.75 ($27), far below the deal’s Rs3,112 floor price.

Several Indian opposition MPs on Thursday demanded that parliament allot time to discuss the claims made by Hindenburg. Adani Group’s investors include state-owned entities such as the Life Insurance Corporation of India and the State Bank of India.

Adani made repeated efforts to reassure investors in the lead-up to the share sale, including releasing a 413-page response to the short seller’s allegations. It also enlisted some of India’s leading tycoons to help get the follow-on offering across the line.

Anchor investors including Abu Dhabi’s International Holding Company and London-listed Jupiter Asset Management had already committed to buying 30 per cent of the offering before the public share sale began on Friday. IHC on Monday pledged to invest $400mn in the sale.

The sell-off has prompted some financial groups, including Citigroup’s wealth unit, to stop accepting Adani securities as collateral for margin loans, according to one person with direct knowledge of the situation.

Adani Group on Thursday also denied “market rumours” that shares in its cement-making outfits, Ambuja Cements and ACC, had been pledged as collateral as part of acquisition finance and that the group was under pressure to cover losses resulting from share price falls.

Adani Group debt has also been hit by selling, with a dollar bond from Adani Ports maturing in 2024 dropping 20 cents to just below $0.70 on the dollar on Wednesday, while another bond maturing in 2024 from Adani Green Energy fell about 10 cents to $0.67 on the dollar.

This post is originally appeared on FT

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