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Inside the 19-hour meltdown that junked Gautam Adani’s share sale



NEW DELHI: Bright smile Gautam Adani stood beside Israeli Prime Minister Benjamin Netanyahu on Tuesday, looking relaxed as hundreds gathered for a signing ceremony at the port of Haifa, where the Indian billionaire is co-developing.
The 60-year-old tycoon has reason to cheer: last-minute auctions helped transform the empire’s flagship from port to power to close a record $2.5 billion share sale despite an attack by short sellers causing a stock sell-off. When he returned home from Tel Aviv at 6:13 p.m. local time on his Bombardier Global 6500 private jet — a relatively new deal with super-fast wireless connectivity — the industrialist spent spend a lot of time in the quietest part of the cabin on a flight. marathon call.
But the brutal sell-off in Adani Corporation shares continued on Wednesday, February 1, wiping out more than $80 billion in market value in a single week — despite the supposed share sale that ended successfully.
Worried investors began calling Adani’s finance team to express concerns, according to people familiar with the events and did not wish to be named because the discussions were private.
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One of them is the Royal Group, the parent company of Abu Dhabi International Corporation, which has pushed the group to reconsider. Adani . Enterprise Company Limitedsell stock, one of the people said.
By Wednesday afternoon, a state-owned financial institution – also one of the key investors in the next offering – said it would no longer support the group. Earlier in the day, opposition parties criticized Narendra Modi’s government in parliament, chanting “Adani, Adani” during the Union Budget speech. The mogul often aligns his corporate strategy with Modi’s nation-building priorities.
At around 5pm in India on Wednesday, Adani asked to convene an emergency board meeting in 30 minutes. The sale of shares has been cancelled. At 10:21 pm in India, the filing was hit the local stock exchange, marking a spectacular turning point.
In just 19 hours, India’s largest-ever follow-up share sale went from a done deal to a scam.
Representatives for Royal Group, IHC and Adani Group did not immediately respond to written requests for comment outside of business hours.
Protect relationships
Adani has chosen to forgo a short-term win in closing his next offer in order to preserve his longer-term relationship with stellar investors who are staring at some embarrassing losses. in the market for the amount they have committed.
And in that breakout, US-based short sellers Hindenburg’s studypublished a scathing report on January 24, claiming its largest casualties.
In its explosive side, Hindenburg accused Adani’s syndicate of “brazen” fraud and years of stock market manipulation, money laundering, as well as other alleged crimes that it considers “a case of fraud” biggest scam in company history.”
Adani Group countered that the report was “bogus”, “malicious” and threatened legal action.
In a 413-page rebuttal on Sunday, it called the Hindenburg report and its short-term bet a “calculated securities fraud” as well as an attack on India and its institutions. It.
Three days later, its share sale took place amid turmoil.
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A depressed person who attended Adani’s emergency meeting on Wednesday said all it took was an attack from a small short seller to destroy years of hard work in just one week.
A veteran trader who helped with the stock sale process said he has never seen a stock offering canceled in this way in his nearly two-decade career.
But a sense of relief among major investors is palpable. The state-run India Life Insurance Group, which is a shareholder in five companies under the Adani Group, sees the decision as a gesture of good corporate governance, according to people familiar with the matter.
That’s also how Adani sold it. Speaking to investors in a video early Thursday to explain the sudden face, he said: “For me, the interest of my investors is paramount and everything only secondary.”
He added that he wanted to protect them from losses. “Despite the volatility of the stock over the past week, your trust and confidence in the company, its business and management has left us all extremely reassured and humbled.”
However, the sell-off continued. By Friday, half of the group’s value, or more than $110 billion, had evaporated since the Hindenburg report was released.
The impact on the broader Indian market is also huge. Since Thursday, the rupee has fallen against all Asian currencies in the period, while spreads on the domestic bond index widened to a four-week high.
Distance itself
The ripple effects have prompted Modi’s government – which is said to have close ties to Adani – to start addressing it publicly and away from the scandal-ridden corporation. While Adani’s interests from ports to energy are inextricably linked with the nation’s growth plans, government officials have spoken of its impact on the broader economy.
“It is between a private company, the regulator and the market; It has nothing to do with macroeconomics,” TV Somanathan, the finance secretary, said in an interview on Thursday. “The exposure of banks and LICs to Adani is not a cause for concern. I don’t see any risk of infection in this.”
Those who arranged the scrapped share offering of Adani’s business have had to accept very small fees and are trying to recoup what they can from what is believed to be a big follow-up share sale. . Much of the $12 million earned by investment banks depends on the success of the deal, people with knowledge of the matter said. Now, they only expect minimal remuneration for their work in the offering.
As the tumultuous week drew to a close, the struggling tycoon negotiated with creditors to prepay some loans secured by mortgage shares, as some banks stopped accepting the group’s securities. mortgage group.
“Things have not settled down yet,” Alok Churiwala, managing director of Mumbai-based Churiwala Securities Pvt, said on Thursday. “One must exercise extreme caution and investors would be advised not to learn about Adani stock until there is clarity on the path forward.”

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