BENGALURU, Feb 1 (Reuters) – Indian tycoon Gautam Adani lost his title as Asia’s richest person on Wednesday as the rout of his conglomerate’s biggest companies worsened to $84 billion following a a report on short sellers.
A Hindenburg Research report last week alleged the group’s misuse of offshore tax havens and stock manipulation, as well as concerns over high debt levels and valuations at seven publicly traded Adani companies.
He stepped up scrutiny of the conglomerate with an Australian regulator saying on Wednesday it would review the allegations to see if further investigations were warranted.
The Adani Group denied Hindenburg’s claims, saying the short seller’s account of stock manipulation had “no basis” and stemmed from ignorance of Indian law. It has always made the necessary regulatory disclosures, he added.
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Wednesday’s stock losses saw Gautam Adani slip to 10th on the Forbes rich list with an estimated net worth of $84.1 billion, just below rival Mukesh Ambani, the chairman of Reliance Industries Ltd (RELI .NS) which has an estimate of $84.4 billion. Prior to the Hindenburg Report, Adani had placed 3rd.
The deepening rout comes despite the group successfully rallying investor support to haul a share sale for flagship Adani Enterprises on the line on Tuesday.
“There was a slight rebound yesterday after the stock sell-off, after having seemed unlikely at one point, but now the weak market sentiment has become visible again after the explosive Hindenburg report,” said Ambareesh Baliga, an analyst at independent market based in Mumbai.
“With stocks falling despite Adani’s rebuttal, this clearly shows damage to investor sentiment. It will take some time to stabilize,” Baliga added.
Adani Enterprises (ADEL.NS), often described as the incubator of Adani businesses, plunged 20% on Wednesday to take its losses since the Hindenburg report to nearly $15 billion. Adani Power (ADAN.NS) fell 5%, while Adani Total Gas (ADAG.NS) fell 10%, down from its daily price limit.
Adani Transmission (ADAI.NS) was down 6% and Adani Ports and Special Economic Zone (APSE.NS) was down 15%.
Adani Total Gas, a joint venture between French energy giant Total (TTEF.PA) and the Adani Group, was the biggest victim of the short sellers report, losing an estimated $27 billion.
The data also showed foreign investors have sold $1.5 billion net of Indian stocks since the Hindenburg report – the biggest outflow on four consecutive days since September 1. 30.
The headaches for the Adani group are likely to continue for some time.
India’s markets regulator, which has reviewed the conglomerate’s deals, also said it would add Hindenburg’s report to its own preliminary investigation.
The state-run Life Insurance Company (LIC) (LIFI.NS) said on Monday it would seek clarification from Adani management on the short sellers report. The insurance giant was, however, a key investor in the sale of Adani Enterprises shares.
Hindenburg said in his report that he had shorted US bonds and traded non-Indian derivatives of the Adani Group.
Reporting by Chris Thomas in Bengaluru and Aditi Shah in New Delhi; Additional reporting by Bharath Rajeshwaran and Aditya Kalra; Editing by Edwina Gibbs
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