A $2.5 billion share sale by India’s Adani Enterprises has hit a halt as the U.S. Shares declined following reports of short sellers. According to three sources familiar with the deal, bankers are now looking to increase the sale or cut the issue price.
The Adani Group, controlled by one of the world’s richest men, Gautam Adani, has seen its seven listed companies lose a combined $48 billion in market value, as Hindenburg Research on Tuesday pegged debt levels and tax havens. Concerns were expressed about the use. The Adani Group has dismissed the report as baseless and has announced that it is considering taking action against Hindenburg.
On Friday, shares of group flagship Adani Enterprises plunged 20%, dragging it 11% below the minimum offer price of the secondary sale. The poor response on the first day of retail bidding, which saw the issue subscribed by around 1%, has raised concerns over whether the sale will be able to go ahead.
A source said, “Everyone was shocked. They didn’t expect such a bad reaction.” The Adani Group has not yet responded to a request for comment.
The options bankers are now considering include extending Tuesday’s last date for subscription to the issue by four days. Another option being considered is to reduce the price, which a source says could be reduced by up to 10%. A decision on the next step is expected on Monday.
The share sale is being managed by Jefferies, SBI Capital Markets of India and ICICI Securities. He has not yet responded to requests for comment. A fourth source said the Adani management is also discussing a share sale internally to decide on the next steps.
The Hindenburg report questioned how the Adani group used entities in offshore tax havens such as Mauritius and the Caribbean islands. It added that major listed Adani companies had “substantial debt”, putting the entire group on a “precarious financial footing”.
Experts have said that revision of the price band or time extension of a public issue can technically be done with a newspaper advertisement and issue of an addendum. Sumit Agarwal, managing partner, RegStreet Law Advisors and a former official at the capital markets regulator of India, said, “Revision of the price band or extension of the time of the public issue can technically be done with a newspaper advertisement and issuing an addendum. “
At the end of the first day of the share sale, investors, mostly retail, had bid for about 470,160 of the 45.5 million shares, according to data from the Indian stock exchange. The sale is being managed by Jefferies, SBI Capital Markets of India and ICICI Securities. He did not immediately respond to requests for comment. A fourth source said the Adani management is also discussing a share sale internally to decide on the next steps.
Significantly, MSCI had recently sought feedback on Adani Group regarding the Hindenburg report. MSCI is a leading provider of research-driven insights and index-based data to investors around the world. MSCI’s move to seek response from the Adani group on the Hindenburg report has added to the company’s woes.
Ultimately, the poor response on the first day of retail bidding and the U.S. A $2.5 billion share sale of India’s Adani Enterprises has been disrupted as shares plunged after reports of short sellers. Bankers are now mulling over whether to increase sales or reduce the issue price. The Adani Group has called the report baseless and is considering taking action against Hindenburg. The share sale is being managed by Jefferies, SBI Capital Markets of India and ICICI Securities.