by NEW DELHI, India — Embattled Indian billionaire Gautam Adani called off a $2.5 billion share sale in his flagship company on Wednesday night after a tumultuous week in which his conglomerate lost tens of billions of dollars in market value after allegations of fraud from a US-based short-selling company. .
Citing a volatile market and unprecedented situation, the Adani Group said in a statement that it had decided not to proceed with its share sale – which was originally sold on Tuesday – and would return the proceeds of the sale. ‘offer.
The company announced the move a day after Adani visited the Haifa port he recently purchased, promising to continue investing in Israel despite its financial difficulties.
Shares linked to Adani have plunged in recent days after Hindenburg Research, a financial research firm known for driving down the stock prices of its targets, accused the group of “brazen” stock market manipulation and accounting fraud, among other things. financial abuse.
As markets closed on Wednesday, Adani Enterprises was down 28%. The sale was a sharp turnaround from the day before, when its stock sale drew nearly 51 million bids, surpassing the 45.5 million offered to the public.
Shares of six of Adani’s other listed companies also fell between 2% and 19%. Adani Ports and Special Economic Zone, which bought Haifa Port with local partner Gadot Group for around $1.2 billion, fell nearly 18%.
View of Haifa port on July 31, 2022. (Shir Torem/Flash90)
“The market was unprecedented and our share price fluctuated during the day. In view of these extraordinary circumstances, the company’s board of directors felt that moving forward with the matter would not be not morally correct,” Adani said in his first remarks since the controversy.
He added that the group acted to protect its investors and insulate them from any financial loss.
The stock sale and its success were seen as a crucial test of investors’ confidence in Adani. Wednesday’s stock losses cost Adani his title as the richest man in Asia and India, as his fortune plummeted to $72 billion, according to Bloomberg. Prior to the Hindenburg Report, his net worth of around $120 billion made him the third richest man in the world.
Hindenburg, who said he was betting against the Adani Group, accused him of having “made the biggest scam in the history of the company”. He said he judged the top seven Adani-listed companies to be “down 85%, purely on a fundamental basis due to exorbitant valuations”.
The company said its report follows a two-year investigation. Most of the allegations related to the group’s debt levels, the activities of senior executives, the use of offshore shell companies to artificially boost share prices and previous fraud investigations. It listed 88 questions for the group to answer.
On Sunday, the Adani Group dismissed Hindenburg’s claims and released a 413-page report that dismissed his questions, saying none were “based on independent or journalistic investigation.” Adani’s response included documents and data tables and said the group had made all necessary regulatory disclosures and complied with local laws.
Hindenburg responded by saying that Adani only answered 26 of his 88 questions and left many of the issues he raised unanswered.
A motorist drives past Adani Corporate House in Ahmedabad, India, Friday, Jan. 27, 2023. (AP/Ajit Solanki)
In his statement on Wednesday, Adani said the decision to drop the share offering would have “no impact on our existing operations and future plans”, adding that the group’s balance sheet was “very healthy” with strong cash flow and secure assets. “Once the market stabilizes, we will review our capital markets strategy,” he said.
Adani made his fortune in coal mining as energy-hungry India grew rapidly after liberalizing its economy in the 1990s. The market value of his companies has skyrocketed in recent years . Adani companies operate airports in major cities, build roads, generate electricity, manufacture defense equipment, develop agricultural drones, sell cooking oil and run a media outlet.
Appearing alongside Prime Minister Benjamin Netanyahu on Tuesday, Adani said his group would revamp the port and boost Haifa’s economy, while literally remaking the city.
“I promise you that in the years to come we will transform the skyline we see around us,” Adani said. “The Haifa of tomorrow – will be very different from the Haifa you see today… Our intention is to make the right set of investments that will not only make the Adani Gadot partnership proud, but all of Israel. “
