In the eye of the storm: Adani stocks crash on rumours of FPI freeze

Shares of Adani Group companies came under heavy selling pressure on Monday following a report that the accounts of three foreign portfolio investors (FPIs) that own group stocks have been frozen by depository firm NSDL – something that the company, the FPIs and NSDL strongly denied later in the day.

Adani Enterprises and Adani Ports saw an erosion of 25 per cent and 19 per cent, respectively, in intra-day trade, while the rest of the four group companies saw their shares hit the 5 per cent lower trading limit.

At one point, the group’s market capitalisation had fallen by more than Rs 1 trillion.

Replying to a query by Adani Group, NSDL said the demat accounts of the three foreign funds were held in “active” status.

The stocks recouped some of the losses after Adani Group and the foreign funds clarified the accounts continued to remain operative.

The six listed companies ended between 4.1 per cent and 8.4 per cent lower and the group lost nearly Rs 54,000 crore in market value.

Information on the NSDL website shows as on May 31, 2021 there is only an “account level freeze” on the Albula Investment Fund, Cresta Fund, and APMS Investment Fund, which have cumulative investments of nearly Rs 30,000 crore in Adani Group stocks.

Market experts said a news report that said the freeze could be on account of insufficient disclosures on beneficial ownership under the Prevention of Money Laundering Act (PMLA). led to panic selling in Adani Group stocks, which had risen between 2.2 times and 11.7 times and added over Rs 7 trillion in market value over the past one year.

The Adani Group companies, in a stock exchange notification during the market hours, said the investor accounts were not frozen and the news reports were “blatantly erroneous and done to deliberately mislead the investing community”.
It further said the reports were “causing irreparable loss of economic value to the investors at large and reputation of the group”.

Separately, the FPIs also denied the reports of their accounts being frozen.

“The fund is not frozen by any means and maintains full as well as normal trading operations globally,” said the APMS Investment Fund in a statement.

The fund added the “account level freeze” was only technical and had “absolutely no relevance to its normal FPI trading activities”. Albula Investment also said “its fund is fully operational with normal trading in and outside India”.

Shares of Adani Group have had a stellar run over the past few years, sending the group into the big league. Earlier this year, the group became the fourth business conglomerate to cross $100 billion in market cap — after Tata Group, HDFC Group, and Mukesh Ambani-led Reliance Group.

Adani Group promoter Gautam Adani is currently the richest Indian after Ambani.

A year ago, Adani Group’s market cap was less than Rs 2 trillion. The sharp spike in the stock prices of group companies has led to allegations of manipulation.

Over 90 per cent of the holdings of Albula, Cresta, and APMS — all three operating out of Port Louis, Mauritius — in the Indian markets are in Adani Group stocks.

Dismissing speculation against the funds, the Adani Group statement said, “This is to clarify that the FPIs in question have been investors in Adani Enterprises for more than a decade. Demergers have resulted in the ownership mirroring in the portfolio companies.”

It said, the group is expecting double digit growth in FY22 across all its verticals including electricity generation, ports and renewable energy sector. "While Adani Ports has guided for a 11 to 12 per cent cargo volume growth, Adani Green Energy operational capacity will increase by over 5 times from under 2 GW in FY20 to nearly 10 GW by FY22. Similarly, Adani Transmission will add 2,500 ckm and cross 20,000 ckm of transmission assets. This will ensure continued outperformance by Adani listed entities in FY22 and beyond," the statement said.

The group, it added, has received funding from world's top investors including Qatar Investment Authority Qatar's sovereign wealth fund, investing close to $430 million in Adani Electricity Mumbai, a 100 per cent subsidiary of Adani Transmission. Besides, French energy giant Total Energies invested over $3 billion both in operational and equity. 

Asking all its stakeholders not to be perturbed by market speculations, it said its portfolio will continue its journey of exponential growth across all verticals thus ensuring immense value to its stakeholders. 

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