Hobbit Business Review

Adani Promoters Prepay $1.1 Billion Loans As Shares Continue To Take Hit On Stock Market

Billionaire Gautam Adani and his family on Monday announced the prepayment of $1.11 billion worth of loans backed by shares of three of the group’s listed firms, as the conglomerate’s units continued to take a hit on the stock market nearly two weeks after being accused of engaging in serious fraud.

In a statement, the Adani Group said its promoters have paid off the loans, which were due in September 2024, in an effort to address “recent market volatility.”

The loans in question had been borrowed against shares of Adani Ports, Adani Green Energy and Adani Transmission owned by the Adani family.

Despite the announcement, the conglomerate’s flagship entity Adani Enterprises ended the day 0.89% in the red, while shares of five of the group’s six other key listed firms hit their lower circuit once again.

Citing sources within the company, the Indian business news daily Mint reported that the Adani Group is planning to slash its capital expenditure plans and recalibrate its growth targets in an effort to deal with liquidity challenges.

The crisis surrounding the company spilled into India’s parliament for the third consecutive day, with opposition parties demanding an investigation into the allegations of fraud raised by U.S.-based short-seller Hindenburg Research.

Several lawmakers protested outside the parliament building, raising slogans decrying the “yaari” or close friendship between Gautam Adani and Prime Minister Narendra Modi—who they accuse of shielding the billionaire.

FORBES VALUATION

According to our estimates, Gautam Adani’s current net worth stands at $60 billion—making him the eighteenth richest person in the world. Since Hindenburg’s allegations were made public nearly two weeks ago, Adani has seen his fortune drop by more than half from $126.4 billion.

KEY BACKGROUND

Late last month, U.S.-based activist investor Hindenburg Research disclosed a short position against Adani’s companies and accused them of engaging in “brazen stock manipulation and [an] accounting fraud scheme over the course of decades.” The company has since vehemently denied these allegations as “maliciously mischievous” while trying to also frame them as an attack on India and its institutions. Despite this, markets have reacted negatively to the allegations, wiping more than $117 billion from the market valuations of the group’s listed firms. The crisis surrounding the company has triggered concerns among India’s opposition politicians and other observers about the exposure of India’s public sector financial institutions, including the Life Insurance Corporation and the State Bank of India, to the Adani Group.

BIG NUMBER

38.6%. That is the percentage by which shares of Adani Group’s flagship firm Adani Enterprises are overvalued, even before accounting for Hindenburg’s allegations, according to an analysis published last week by Aswath Damodaran, the Professor of finance at New York University’s Stern Business School.

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