Although the Adani group
called the report “blatantly erroneous” and said it was “done to deliberately mislead the investing community,” investors concerned over transparency rushed for the exit.
The Mauritius offshore funds hold more than 90% of their assets under management in Adani group
companies, according to Bloomberg Intelligence.
“There should be greater clarity to ensure who the final owners of the shares are,” said Hemindra Hazari, an independent research analyst in Mumbai.
Barred or Not? Adani Investors Fret Over Three Mauritius Funds
A spokesperson for the Adani Group declined to comment beyond the exchange filings sent this week. These overseas funds “have been investors in Adani Enterprises Ltd. for more than a decade,” Adani Group said in a June 14 statement. “We urge all our stakeholders not to be perturbed by market speculations.”
In identical exchange filings the same day, Adani group companies
said that they had written confirmation from the Registrar and Transfer Agent that the offshore funds’ demat accounts in which Adani shares were held “are not frozen.”
Shares of Adani Green Energy Ltd., the mogul’s most valuable asset, slipped 7.7% this week. Adani Ports & Special Economic Zone Ltd. plunged 23% in four days, Adani Power Ltd., Adani Total Gas Ltd. and Adani Transmission Ltd. tumbled at least 18%, while flagship Adani Enterprises fell almost 15%.
Excitement around the Adani empire spanning ports, mines and power plants had been building up over the past couple of years as the coal magnate looks beyond the dirtiest fossil fuel for expansion, seeking to dovetail his business interests with infrastructure priorities set by Prime Minister Narendra Modi.
Investors have sent some of the group’s stocks soaring more than 500% since the start of 2020, betting the first-generation entrepreneur’s big push into sectors such as renewable energy, airports, data centers and defense contracting will pay off. Earlier this month, Adani’s wealth was close to $80 billion.
Adding to the tailwind was MSCI Inc.’s decision to include more Adani stocks to its India benchmark index despite scant analyst coverage. Three of Adani’s listed companies
were included in May, taking the group’s total to five. The inclusion also led to more mandated buying by investors that track the indexes.
The quick surge combined with equity largely held by overseas funds with very little public float is a risk for Adani shares, BI analysts wrote last week. This week’s events have also brought the opacity around the group and its key non-founder shareholders into focus.
“I expect the speculative cycle in Adani Group company shares has probably reached its term,” Travis Lundy, an analyst at Smartkarma wrote in a note.
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