Gautam Adani, Chairman of Adani Group has gone from being the world’s third’s richest person on 17 January 2023 to not even being among the top 20 on Friday, 3 February. Adani’s net worth has fallen sharply from $124 billion on 17 Jan to $61.3 billion as of Friday. The steep decline in Adani’s fortune comes as a result of the Adani Group companies shedding $108 billion in market value since Hindenburg Research accused it of stock manipulation and accounting fraud in a 24 January report. He has tumbled to 21st spot on the Bloomberg Billionaires Index.
Biggest wealth loser
Once ranked number 1 among richest among India and Asia’s wealthiest, Gautam Adani is now India’s second richest and the third richest Asian. Hindenburg, the US-based short seller with its 103-page scathing report revived old doubts about corporate governance at the Adani conglomerate. Adani’s long 412-page rebuttal has failed to reassure investors as Adani Group companies’ stocks continue to hit lower circuits almost everyday. In the aftermath of the allegations leveled by Hindernburg, Adani has gone from being the biggest wealth gainer in 2022 to becoming the biggest loser on Bloomberg’s rich list this year.
Hindenburg allegations open can of worms for Adani Group
Earlier, bonds of Adani group’s flagship firm plunged to distressed levels in US trading, and the company abruptly pulled a record domestic stock offering after shares in the Adani group suffered a $92 billion crash. Following this, Swiss lender Credit Suisse on Wednesday stopped accepting bonds by Adani group companies as collaterals for margin lending. Citigroup Inc.’s wealth arm has also stopped accepting securities of Gautam Adani’s group of firms as collateral for margin loans as banks ramp up scrutiny of Adani’s finances. “In recent days, we have seen a dramatic price drop of Adani issued securities,” Citigroup said in an internal memo seen by Bloomberg. “Stock and bond prices have plummeted following the negative news around the group’s financial health.”
The Reserve Bank of India (RBI) has reportedly sought details about lenders’ exposures to the Adani Group, a day after the conglomerate withdrew the Rs 20,000-crore follow-on-public offer (FPO) of its flagship firm Adani Enterprises amid the steep fall in its stock prices. Note that India’s largest lender SBI had said it’s exposure to Adani group is fully secured by cash generating assets. Another public sector lender Bank of Baroda has said its total exposure to the embattled group stood at Rs 7,000 crore, which are also fully secured.
Meanwhile, the National Stock Exchange (NSE) has put three Adani stocks, namely, Adani Enterprises, Adani Ports, and Ambuja Cements, under the additional surveillance measure (ASM) framework from 3 February 2023. An additional surveillance measure (ASM) was introduced by the Indian market regulator SEBI and the bourses as a risk containment and surveillance to monitor highly volatile stocks. When placed under ASM, the entire traded value will get blocked as margins, that is, intraday leverage is not given.