Adani shares see renewed selling on report of $400 million debt talks

© Reuters

By Ambar Warrick

Investing.com -- Shares of companies under the Adani Group sank on Monday after a report said the Indian conglomerate was in talks to raise more debt funding, which raised renewed concerns over the firm’s stretched debt position.

Indian publication the Economic Times (ET) reported that Adani Group is in talks with creditors to raise up to $400 million in debt backed by its assets in the Carmichael coal mine in Australia. The conglomerate is in talks with several high-yield global credit firms over the matter, and has received a term sheet from lenders including Farallon Capital Management. 

The ET report dented the shares of Adani firms, given that it comes a month after short-seller Hindenburg Research criticized the firm’s stretched debt position in a report. 

Shares of Adani Enterprises Ltd (NS:ADEL), the conglomerate’s flagship firm, sank over 7% on Monday, while those of 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 5% each, hitting their intraday circuit breakers.

The conglomerate lost over $130 billion in value in the month since the release of the Hindenburg report, which also cost founder Gautam Adani his title as Asia’s richest man. The report had alleged that Adani’s listed firms had “substantial debt” which put the entire group on shaky footing, and had also alleged that shares in the seven listed firms under the group had an 85% downside on a fundamental basis. 

Adani had denied the allegations. But the group had also scrapped a $2.5B secondary offering by Adani Enterprises, after shares of the firm slumped well below the offer price. 

The Hindenburg report had also attracted regulatory scrutiny from Indian and foreign watchdogs, as saw index operator MSCI reassess Adani's weightage in some of its indexes. Recently, Reuters reported that the Australian Securities & Investments Commission was also looking into the short seller's allegations against Adani.