“Once the current market stabilizes, each entity will review its capital market strategy. Rest assured, we are confident in our portfolio’s continued ability to deliver superior returns to shareholders,” the Adani spokesperson said.
The Adani crisis has sparked concerns about financial contagion in India and the ability to move forward with infrastructure projects.
After US short seller Hindenburg Research released its report on Jan. 24, shares of Adani Group companies have been in freefall, with a market value of more than $120 billion.
The report had accused the Adani Group of carrying out “the biggest scam in corporate history” using offshore tax havens and stock manipulation.
Here’s a look at recent events in the Adani-Hindenburg saga:
* The government will set up a panel to strengthen regulatory mechanisms
The Center accepted the Supreme Court’s proposal to set up a panel of experts to look into strengthening stock market regulatory mechanisms in the wake of the recent crash in Adani Group shares triggered by Hindenburg Research fraud allegations.
Stating that it has no objection to the constitution of the panel, the Center, at the same time, stressed that the market regulator Securities and Exchange Board of India (Sebi) and other statutory bodies are “fully equipped”, not only from the point of view of regime, but also to deal with the situation. He also wanted to be able to provide details such as the names and scope of the constituency’s mandate in a “sealed cover”.
Last week, the Board of Directors said Indian investors’ interests must be protected from market volatility against the backdrop of the Adani stock rout and asked the Center to consider setting up a domain expert group led by a former judge to look into strengthening regulatory mechanisms.
* “Healthy balance sheets”
Since the publication of the Hindenburg report, Adani Group has denied all allegations made by it. In response, they called the allegations “damaging”, “baseless” and a “calculated attack on India”.
The group called Hindenburg the “Madoffs of Manhattan,” referring to the late financier and con man Bernie Madoff.
“The balance sheet of each of our independent portfolio companies is very healthy,” said the Adani Group spokesperson. “We have industry-leading development capabilities, strong corporate governance, secure assets, strong cash flows, and our business plan is fully funded.”
* Sebi’s allegations
Market regulator Sebi told the Supreme Court on Monday it was investigating allegations made against the Adani group of companies by Hindenburg Research.
“Sebi is already investigating both the allegations made in the Hindenburg report and the market activity immediately preceding and following the release of the report,” the regulator said in the filing, adding that the matter was in the early stages of consideration.
“Sebi is strongly and adequately empowered to put in place regulatory frameworks to carry out stable operations and development of the securities markets,” he added.
* Prepayment of loans
Ahead of the expected payment to release the pledged shares in 3 listed companies, Adani Group repaid $1.1 billion (Rs 9,203 crore) worth of loans.
According to a media statement, Adani’s early repayment will release 12% of its stake in Adani Ports, 3% in Adani Green and 1.4% in Adani Transmission.
Adani repaid the loans early well ahead of the September 2024 deadline “in light of the recent market volatility and in continuity with the promoters’ commitment to reduce the promoter’s overall leverage supported by the shares of the listed company Adani”.
* Pledge of extra shares
The group has now pledged additional shares for the State Bank of India (SBI). Adani Ports and Special Economic Zone (APSEZ), Adani Transmission and Adani Green Energy pledged shares in SBICAP Trustee Company, a unit of India’s largest lender, SBI.
Up to 75 lakh more shares of APSEZ were pledged, bringing the total to 1% of all shares with SBICAP. In the case of Adani Green, the pledge of 60 lakh more shares brought the total to 1.06%.
* Adani Hires Most Expensive Law Firm in US
Wachtell, Lipton, Rosen & Katz, one of New York’s most expensive law firms, was brought in by the Adani Group to fight the case against the allegations Hindenburg made in his report.
According to a Financial Times report, Wachtell was contacted by the Mumbai law firm Cyril Amarchand Mangaldas, which leads the defense of the Adani group.
* MSCI reduces weighting of Adani shares
Global equity index provider MSCI has changed the weighting of four Adani Group stocks that are constituents of its indices and are closely monitored and benchmarked by global fund managers.
MSCI has reassessed the float size of some companies, having determined that there was “sufficient uncertainty” surrounding some investors in the Adani companies. He initiated the review after feedback from market participants.
* The total holds investment pending
Last week, French oil major TotalEnergies – one of the largest foreign investors in Adani Group – said it would wait for the outcome of an independent audit before proceeding with investment in Adani Group’s $50 billion plans to produce hydrogen. green.
It has also now decided to suspend the $4 billion investment in the green hydrogen venture, pending audits.
A report from the Economic Times said it could be a major blow to the timeline of the new venture to produce green hydrogen at $1 per kg by 2030.
* Rating agency report
Rating agencies continued to be cautious on Adani Group shares, with most of them downgrading their outlook to negative over the past week.
Moody’s has announced the downgrade of the rating outlook to negative from stable for four companies: Adani Green Energy, Adani Green Energy Restricted Group, Adani Transmission Step-One Ltd and Adani Electricity Mumbai Ltd.
“These rating actions follow the significant and rapid decline in market share values of Adani Group companies following the recent release of a short seller report highlighting governance concerns at the group,” Moody’s said.
Meanwhile, Fitch Ratings last week said Indian banks’ exposure to the troubled Adani Group is “by itself insufficient” to present a substantial risk to the credit profiles of these lenders.
* Govt, RBI chief responds
Amid the crisis plaguing the Adani Group, Finance Minister Nirmala Sitharaman said regulators like Sebi and RBI should always be “on the alert” and act in time to keep markets stable.
Speaking to Times Now about Adani’s stock’s massive rout following the Hindenburg Research allegations, the finance minister said he had no opinion on the report, but added that banks and insurance companies facing the exposure are expressing and reassuring the common Man.
Meanwhile, RBI Governor Shaktikanta Das said India’s financial sector is resilient and would not be affected by a single crash.
TV Finance Secretary Somanathan also assured that exposure of any nationalized bank or insurance company in Adani group companies should not be a cause for concern for depositors, policyholders or investors.
The State Bank of India’s and Life Insurance Corporation’s exposure to any one company is far below where investors should be concerned, he said.
