Adani Group shares plummet on $2.5 billion FPO cancellation, SEBI probe

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By Ambar Warrick 

Investing.com-- Shares of seven listed firms under the Adani Group plummeted on Thursday after the conglomerate abruptly withdrew a fully subscribed $2.5 billion secondary share offering, while media reports said that the Indian securities regulator was investigating the firm. 

Adani Enterprises Ltd (NS:ADEL)- the conglomerate's flagship unit and the subject of the share offering, saw high volatility in early trade, swinging from as low as INR 1,815.05 ($1 = INR 81.765) to as high as INR 2,131.00 a share. The stock was trading down 5% by 11:39 PM ET (04:39 AM GMT). 

Adani Ports and Special Economic Zone Ltd (NS:APSE) also saw wild swings in early trade, and was last trading down 2.8%. The remaining five companies- Adani Wilmar Ltd (NS:ADAW), Adani Power Ltd (NS:ADAN), Adani Total Gas Ltd (NS:ADAG), Adani Green Energy Ltd (NS:ADNA) and Adani Transmission Ltd (NS:ADAI), lost between 4% to 10%, having also hit their respective circuit breakers in early trade.

Adani Enterprises called off its $2.5B share offering in an overnight statement, saying that it could not proceed with the offering amid market volatility in the wake of a short seller report from Hindenburg Research.

“The board felt that going ahead with the issue will not be morally correct,” Adani Enterprises Chair Gautam Adani said in a statement. This came even as the issuance was fully subscribed, with major family houses and foreign investors ranking among the subscribers. 

Reuters reported that the Securities and Exchange Board of India (SEBI) is now examining the crash in Adani shares, and is also looking into irregularities in the conglomerate’s share sale and potential stock price manipulation.

The Hindenburg report triggered a nearly $90B wipeout in the value of Adani Group’s shares, driving the stock of Adani Enterprises well below the minimum price in its secondary offering. 

The report raised concerns over the conglomerate’s stretched debt position, and also accused Adani of engaging in money laundering and stock market manipulation.

The ports-to-power conglomerate categorically denied the allegations, and threatened legal action against Hindenburg over the report. Until Wednesday, it said it was committed to proceeding with Adani Enterprises’ secondary offering. 

Losses in Adani spilled over into broader Indian markets, with the Nifty 50 and BSE Sensex 30 indexes losing about 0.3% each. Industrial and bank stocks exposed to the conglomerate logged hefty losses.