Adani Group shares ride a roller coaster after short seller’s accusations
The US short seller says the Sebi chair has a conflict of interest in the Adani fight
12 August 2024 - 16:21
by Agency Staff
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The logo of the Adani Group is seen on the facade of its Corporate House on the outskirts of Ahmedabad, India on January 27 2023. File Picture: REUTERS/Amit Dave
Bengaluru — Adani Group companies lost as much as $19bn in market value on Monday but recovered much of the losses after Hindenburg Research accused the head of India’s market regulator of having links to offshore funds also used by Adani.
The battle between Hindenburg Research and the Adani Group began 18 months ago when the US short seller alleged Adani improperly used tax havens, accusations which the conglomerate has denied.
At 8.50am GMT, the group’s flagship firm Adani Enterprises had fallen 1.5%, while Adani Ports, Adani Total Gas, Adani Power, Adani Wilmar and Adani Energy Solutions fell between 0.5% and 3.8%. Adani Green was up 0.3%.
Total losses for the day at that time amounted to $8.2bn after the early plunge and the final loss for the day was $2.43bn.
The stocks had lost $150bn in value after Hindenburg’s first report in January 2023 but shares have recovered much of the losses since then.
Adani Enterprises and Adani Ports were among biggest losers on the blue-chip Nifty 50 index, which reversed course from early losses to last trade up 0.3%.
“The allegations are coming for the second time. Lot of investigations have happened over the last year and a half. This is a temporary, knee-jerk reaction. Things will get back to normalcy,” said Sunny Agrawal, head of fundamental equity research at SBICAPS Securities.
Citing whistle-blower documents, Hindenburg said on Saturday that Securities and Exchange Board of India (Sebi) chair Madhabi Puri Buch has a conflict of interest in the Adani matter due to previous investments.
Buch has been Sebi chief since 2022.
“We do not think Sebi can be trusted as an objective arbiter in the Adani matter,” Hindenburg said on Saturday.
Buch said the report’s allegations were baseless and in a separate statement the regulator said allegations made by Hindenburg Research against the Adani Group have been duly investigated.
Buch termed Hindenburg’s allegations as an attempt at “character assassination” after the regulator’s enforcement action and “show cause” notice to the short seller for violating Indian rules. A show cause notice signals an intention to take disciplinary action if satisfactory explanations are not provided.
Adani rejected the allegations against it again on Sunday and said its overseas holding structure was fully transparent. The latest allegations from Hindenburg come at a time when Adani Enterprises is looking to launch a $1bn share sale by mid-September. Adani Energy raised $1bn from US investors and sovereign wealth funds earlier in August.
In January 2023, Adani Enterprises had shelved its record $2.5bn share sale after the first set of allegations by Hindenburg.
“We will likely see a short to medium-term sentiment impact on Adani stocks, especially as retail investors are pressurised by the allegations made against Sebi,” said Kranthi Bathini, director, equity strategy, at WealthMills Securities.
The new set of allegations have also gained political traction, with India's opposition leader Rahul Gandhi saying on X: “The integrity of Sebi, the securities regulator entrusted with safeguarding the wealth of small retail investors, has been gravely compromised by the allegations against its chair.”
Ruling Bharatiya Janata Party legislator Ravi Shankar Prasad said: “Instead of giving a response to the Sebi show cause notice, Hindenburg has issued this report, which is a baseless attack.”
“The Sebi and the family (of Buch) have responded, we don’t have anything to add to that,” he told reporters.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Adani Group shares ride a roller coaster after short seller’s accusations
The US short seller says the Sebi chair has a conflict of interest in the Adani fight
Bengaluru — Adani Group companies lost as much as $19bn in market value on Monday but recovered much of the losses after Hindenburg Research accused the head of India’s market regulator of having links to offshore funds also used by Adani.
The battle between Hindenburg Research and the Adani Group began 18 months ago when the US short seller alleged Adani improperly used tax havens, accusations which the conglomerate has denied.
At 8.50am GMT, the group’s flagship firm Adani Enterprises had fallen 1.5%, while Adani Ports, Adani Total Gas, Adani Power, Adani Wilmar and Adani Energy Solutions fell between 0.5% and 3.8%. Adani Green was up 0.3%.
Total losses for the day at that time amounted to $8.2bn after the early plunge and the final loss for the day was $2.43bn.
The stocks had lost $150bn in value after Hindenburg’s first report in January 2023 but shares have recovered much of the losses since then.
Adani Enterprises and Adani Ports were among biggest losers on the blue-chip Nifty 50 index, which reversed course from early losses to last trade up 0.3%.
“The allegations are coming for the second time. Lot of investigations have happened over the last year and a half. This is a temporary, knee-jerk reaction. Things will get back to normalcy,” said Sunny Agrawal, head of fundamental equity research at SBICAPS Securities.
Citing whistle-blower documents, Hindenburg said on Saturday that Securities and Exchange Board of India (Sebi) chair Madhabi Puri Buch has a conflict of interest in the Adani matter due to previous investments.
Buch has been Sebi chief since 2022.
“We do not think Sebi can be trusted as an objective arbiter in the Adani matter,” Hindenburg said on Saturday.
Buch said the report’s allegations were baseless and in a separate statement the regulator said allegations made by Hindenburg Research against the Adani Group have been duly investigated.
Buch termed Hindenburg’s allegations as an attempt at “character assassination” after the regulator’s enforcement action and “show cause” notice to the short seller for violating Indian rules. A show cause notice signals an intention to take disciplinary action if satisfactory explanations are not provided.
Adani rejected the allegations against it again on Sunday and said its overseas holding structure was fully transparent. The latest allegations from Hindenburg come at a time when Adani Enterprises is looking to launch a $1bn share sale by mid-September. Adani Energy raised $1bn from US investors and sovereign wealth funds earlier in August.
In January 2023, Adani Enterprises had shelved its record $2.5bn share sale after the first set of allegations by Hindenburg.
“We will likely see a short to medium-term sentiment impact on Adani stocks, especially as retail investors are pressurised by the allegations made against Sebi,” said Kranthi Bathini, director, equity strategy, at WealthMills Securities.
The new set of allegations have also gained political traction, with India's opposition leader Rahul Gandhi saying on X: “The integrity of Sebi, the securities regulator entrusted with safeguarding the wealth of small retail investors, has been gravely compromised by the allegations against its chair.”
Ruling Bharatiya Janata Party legislator Ravi Shankar Prasad said: “Instead of giving a response to the Sebi show cause notice, Hindenburg has issued this report, which is a baseless attack.”
“The Sebi and the family (of Buch) have responded, we don’t have anything to add to that,” he told reporters.
Reuters
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