NEW DELHI (Reuters) – Gautam Adani faces a critical day on Monday. His flagship company’s second day of bidding with a $2.5 billion share sale has been overshadowed by a $48 billion drop in the Indian billionaire’s shares, sparked by a report from a US short seller.
Seven publicly traded companies belonging to the Adani conglomerate, which is led by Asia’s richest man, saw their value fall sharply after the Hindenburg Research report last week raised concerns about high levels of debt and the use of tax havens.
Adani Group called the report baseless and said it is considering taking action against Hindenburg.
For 60-year-old Adani, the stock market collapse was a dramatic setback for a college dropout who quickly rose to become the third richest man in the world in recent years before dropping to seventh on the Forbes list last week.
Secondary share sales by Adani Enterprises kicked off Friday for retail and institutional investors, but saw only 1% subscriptions as the company’s shares fell 11% below the minimum bid price.
Adani Group told Reuters in a statement on Saturday that the sale remains on track at the planned issue price, even though sources said bankers of the country’s largest secondary share sale were considering extending the timeline beyond Jan. 31 or adjusting the price due to the fall in its share price.
“It is important for the Adani Group to make sure the share sale continues – if they stick to the price and don’t lower it, and the shares don’t bounce back, no one will want to sign up,” said Mumbai-based market analyst, Ambareesh Baliga , which advises several family offices.
“Monday’s trading will be crucial.”
Some shares of the Adani Group are up more than 1,500% in the past three years due to aggressive expansion in businesses such as ports, power generation, airports and mining.
Adani Enterprises has set a price floor of 3,112 rupees per share and a limit of 3,276 rupees on secondary share sales – well above their closing price of 2,761.45 rupees on Friday.
Arun Kejriwal, founder of Kejriwal Research & Investment, said investors will likely wait until the last day of the share sale to see if the price range is adjusted.
“I expect Friday’s free fall to ease, but recovery to pre-fall levels may be difficult,” he added.
Indian regulations say that the share issue must receive a minimum subscription of 90%, and if not, the issuer must refund the full amount.
Maybank Securities and Abu Dhabi Investment Authority are among the investors bidding for the anchor portion of the offering.
On Saturday, index provider MSCI said it was seeking feedback from market participants on Adani and monitoring factors that “may affect the suitability of those relevant securities” in MSCI indices.
There are at least six Adani Group companies in the MSCI India Index, with a cumulative weight of 4.31%.
(Reporting by Aditya Kalra, Ira Dugal, Jayshree P Upadhyay and Chris Thomas; Editing by Alexander Smith)