The massive selloff in Adani Group stocks continued for the third consecutive session on Monday, wiping out nearly £14 billion worth of investors’ wealth. In all, nearly a third of the group’s market capitalisation, or about £56 billion, has been cumulatively eroded in the last three sessions.
The steep slide in the conglomerate's stocks -which started on Wednesday after US-based short seller Hindenburg Research released a report criticising the group - also pushed its chairman Gautam Adani to the eighth spot among the world’s richest, down from seventh on Friday and third a week earlier. With a net worth of $88. 2 billion (about £72 billion), Asia’s richest person is just $4. 1 billion (about £3.3 billion) ahead of Reliance Industries chairman Mukesh Ambani, who’s at the 10th spot, according to Forbes' real time billionaire index.
The sharp sell-off in these stocks came despite the group on Sunday night releasing a 413-page document to answer 88 queries that Hindenburg Research had raised.
Over the last three days, Adani Total Gas has lost nearly 40% of its value while Adani Transmission and Adani Green Energy are down 38% each. During this period, each of the stocks belonging to the group have lost in double-digit percentages, BSE data showed. NDTV, the media company recently acquired by the group, is the least affected with a drop of about 14%.
Consequently, the group’s shareholders have also incurred a massive erosion in their wealth with the total figure at nearly £56 billion or $68.3 billion. From £192 billion on January 24, the group’s market capitalisation is now down to £136 billion, according to BSE data. In percentage terms, the group has lost 29% of its total market capitalisation since Hindenburg released its report late on January 24.
Bets on big funds for £2 bn FPO
Institutional investors are fully backing the £2 billion follow-on public offer (FPO) for Adani Enterprises (AEL) even though the stock is below the offer price. The reason for this confidence is that the institutional investors see high value in the companies AEL is incubating within its fold, a top Adani Group executive said.
When it comes to retail investors, the company is not sure how they will look at the issue at the current market price. However, it is confident some high net worth and ultra-high net worth investors (UHNIs) will participate in it.
“People invest in AEL not because they see value, but in the incubating assets. Adani Airport, Adani New Industries, Adani Roads, Adani Digital and Adani Data centres have value,” group CFO Jugeshinder Singh said. “If they are shareholders of AEL, then when these businesses are demerged, they will get those shares. The underlying value has not changed at all…they want to get those (infrastructure) assets in the future,” Singh said.
