How shares of India’s Adani Group shed $26b in market value in a week

Gautam Adani Photographer: Adeel Halim/Bloomberg

Shares of companies controlled by Indian billionaire Gautam Adani recorded their biggest weekly losses ever. The six stocks cumulatively lost Rs 1.91 lakh crore ($25.83 billion) of value over five days through Friday.

Indian newspaper Economic Times reported on Monday the accounts of three Mauritius-based funds, which are among the top foreign investors in Adani group companies, had been frozen by the National Securities Depository Ltd (NSDL).

The NSDL website showed accounts held by the three funds frozen as of May 31, among thousands of others, without citing a reason, according to a review by Reuters. The exact date of the freeze is unknown and the accounts remained frozen on Friday, according to the website.

Denials, contradictions

The Adani Group firms, in identical statements issued to stock exchanges, rejected media reports, including in the Economic Times, as “blatantly erroneous.”

The companies, which are in the businesses of operating airports and ports, power generation and transmission, coal and gas trading, said the accounts in which the funds hold Adani shares were not frozen.

NSDL and India’s securities regulator SEBI did not respond to requests for comment from Reuters.

But a senior NSDL official, who declined to be identified, told Reuters on Monday the funds have multiple accounts and that the Adani shares were held in other accounts that were not frozen, adding that freeze was “not new”.

The shares of the Adani companies however have continued to fall.

The funds

The three foreign funds — Albula Investment Fund, Cresta Fund, and APMS Investment Fund — are all registered at the same address, according to the Mauritius financial regulator.

The funds cumulatively control 2.7% of all shares in the Adani Group companies as on June 11, calculations based on an e-mail sent by Adani executive to NSDL and reviewed by Reuters showed.

Two other Mauritius-based funds that are also investors in Adani companies — LTS Investment Fund and Asia Investment Corp — are also registered at the same address.

Reuters was unable to find a website for all five funds, and calls to the phone numbers provided to Mauritius regulators went unanswered.

The five funds deployed 94.4%-97.9% of their total capital in Adani companies’ shares, data by Indian stocks analysis firm Trendlyne showed.

Reuters could not independently verify Trendlyne data.

Four of the six Adani stocks have a public shareholding of about 25% – the minimum level mandated by regulators for companies listed on Indian exchanges.

Indian stock exchange data shows most shares of Adani Group companies are held by trusts controlled by Adani. Foreign portfolio investors are the next largest shareholders, while retail and domestic investors typically control about 5%.

The impact

After falling 0.4-8.5% on Monday, the day of the Economic Times report, Adani group stocks fell between 7.1%-22.6% over the week compared with last Friday’s close, wiping out nearly 22% of the gains in the year preceding this week.

The decline saw the firms’ cumulative market capitalisation decline by over a sixth.

Flagship Adani Enterprises rose 8.76% and Adani Ports rose 7.33% on Friday, but the four other Adani stocks each closed 5% lower.

Jimeet Modi, founder of Mumbai-based Samco Securities, said the jump in the two stocks was due to some investors buying the shares after the steep fall in prices this week, but added that the stocks were “still in a bear market”.

“I don’t think the market is convinced with the quality of the clarification from the Adani group,” Modi told Reuters.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.