This year started off great for Adani Group, as India’s one of the top billionaire, Gautam Adani, announced a follow-on public offer to raise INR 20,000 crore from the Indian stock market. Till February, it was a smooth transition for Adani Group, but problems started when a New York-based investment research firm known as Hindenburg Research published a report stating Adani was a fraud.
The searing report clearly accused Adani Group of involvement in accounting fraud and manipulation of stocks, a claim that has brought Adani down to his knees from the throne of the third richest man in the world to slip off the ranking of even the top 20 currently.
After the release of this report, stocks of all the Adani Group companies declined magnificently, a rout that continued for more than 6 days straight to a month. Adani Group has already lost up to $108 billion, including the personal wealth of Gautam Adani, which is up to $48 billion in a week itself.
Again, on Monday, i.e., May 15, 2023, the shares of Adani Group fell drastically after the two firms approved the proposals to raise the money up to $2.6 billion. That is when MarketWatch raised concerns about diluting equity.
Since May 3rd, the incubator for new group businesses, Adani Enterprises Ltd., has risen to 4.4%. The firms gave the heads-up to raise the money up to 125 billion Indian rupees via Qualified Institutional Placement or any other method, according to the exchange filing Saturday. Also, Adani Transmission Ltd. Can give up to 85 billion Indian rupees via similar methods, the utility said separately.
The fundraiser that is to be conducted now is a big concern due to the continuous fall in Adani stock prices. This fundraiser is basically a strategy of Gautam Adani to comeback as a big competitor in the market after the strong allegations by Hindenburg Research Firm of account fraud and manipulation in January this year. Even though the accusations were clearly and loudly denied by the Adani Group, they have been repairing the damage done since then by winning the investors back, repaying all debts, and getting back into the market like before.
“The approved fundraising is causing dilution concerns,” said Deepak Jasani, head of retail research at HDFC Securities Ltd. in Mumbai, stating the MSCI decision also hurt sentiment for the group stocks in general, according to The Times of India.
The Adani stocks rebounded when US-based GQG Partners bought stocks from the Adani family in four companies for about $1.9 billion in early March.
Rajiv Jain from GQG said to Bloomberg, “The Adani Firms have phenomenal and irreplaceable assets.” Investors were told that these shares or stocks could be “multibaggers” over the next 5 years.
Founder of Mumbai based Piper Serica Advisors Pvt., Abhay Agarwal, said, “While the promoters had deleveraged their own personal loan book by selling their shares to GQG, the companies still needed to deleverage.” “The only concern for investors would be that this kind of activity assurance will put a cap on the market price for some time because with the free float increasing by the issuance of new shares, the demand in the secondary market would reduce,” he added in his statement.
Adani Green Energy Ltd. was supposed to hold its board meeting this week but had to postpone it to the 24th of May, giving the reason that certain exigencies needed to be attended to at the moment.
Adani Group is being monitored by Indian Market Regulators for unusual market activity or violations taking place in the Adani Group stocks. The Supreme Court has asked for a report from the Indian Market Regulators that contains all the data about the financial part of Adani Group, both nationally and overseas. The court hearing is supposed to take place on Monday morning.