New Delhi: The embattled Adani Group may now be finding itself in a more secure position domestically, thanks in part to actions such as prepayments of debt as well as statements from the Reserve Bank of India (RBI) as well as the conglomerate’s lenders. But abroad, it continues to face some trouble — not only are regulators in various countries reportedly investigating Hindenburg Research’s allegations against the group but wealth funds are also cutting their ties with Adani companies.
Ever since American short-seller Hindenburg Research released its seemingly-damning report alleging corporate malpractice, stock price manipulation and fraud by the Adani Group on 24 January, the group has been trying to put out domestic as well as international fires.
As a way to assuage lenders, the Adani Group Monday said it had prepaid loans worth $1.11 billion, which were due in September next year. On Thursday, the Group said it was prepaying another $500 million in loans.
In a rare statement last Friday, the RBI also made clear that the banking sector was “resilient and stable”, a comment it made in response to media reports expressing concern about the exposures of Indian banks to “a business conglomerate”. Around the same time, the Indian banks that had lent to the Adani Group — State Bank of India, Bank of Baroda, Punjab National Bank, Axis Bank and IndusInd Bank — revealed their exposure to the Adani Group and reassured their investors and the public that there was no risk arising from these loans.
Similarly, in post-Budget interviews last week, Union Minister for Finance Nirmala Sitharaman said that Life Insurance Corporation’s (LIC) investments in Adani companies were well within the permissible limits. LIC itself told the government that it had followed procedure and done its due diligence while making these investments.
If the Adani Group’s stock prices are any indication, these assurances may be working within India. Over the past week, the stock price of Adani Enterprises — the Group’s flagship company — has recovered 26 per cent.
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Foreign companies & govts not as convinced
But when it comes to the international market, the story’s different. The latest in a string of international actions that underscore declining confidence in Adani companies is the decision by Norway’s $1.35 trillion sovereign wealth fund Thursday to sell its stake in three Adani Group companies — Adani Total Gas, Adani Ports & Special Economic Zone, and Adani Green Energy.
At the same time, international index provider Morgan Stanley Capital International (MSCI) said that it was cutting down the number of Adani companies shares that can be freely traded, leading to a fresh tumble in the price of Adani shares on India’s stock markets.
Incidentally, following this decision, Hindenburg Research’s founder Nathan Anderson tweeted that he viewed this as “validation of our findings on offshore stock parking by Adani”.
This news follows a string of announcements last week by government regulators of various countries and stock exchanges. On 1 February, the Australian media reported that the country’s corporate regulator — the Australian Securities & Investments Commission — was reviewing the Hindenburg report. More recently, on 8 February, news emerged that the Financial Conduct Authority (FCA) in the UK has launched a probe against the Adani Group and Elara Capital, a company reportedly linked closely to the Adani Group.
The ongoing audits of the Adani Group’s dealings also seem to be impacting its business relationships — France’s oil company TotalEnergies said Wednesday that it had not yet signed a contract announced last year extending its partnership for the production of green hydrogen.
“It (the agreement) was announced, nothing was signed. It doesn’t exist,” TotalEnergies Chief Executive Officer Patrick Pouyanne said. “Adani has other things to deal with now, it’s just good sense to pause things while the audit goes forward.”
(Edited by Uttara Ramaswamy)
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