Embattled Indian billionaire Gautam Adani yesterday said that his conglomerate would review its plans for raising capital after calling off his flagship company’s US$2.5 billion share sale following the loss of tens of billions of US dollars in market value due to claims of fraud by a US-based short-selling firm.
Adani Enterprises Ltd canceled the share sale late on Wednesday, citing “market volatility.”
Stocks in the coal mines to ports empire sank after Hindenburg Research, which has a track record of sending stock prices of its targets tumbling, accused the group of “brazen” stock market manipulation and accounting fraud, among other financial abuses.
Photo: AFP
The share sale was seen as a crucial test of investor confidence in Adani, whose net worth shot up about 2,000 percent in recent years as share prices for his listed companies soared.
By the time trading closed on Wednesday, Adani Enterprises was down by 28 percent. However, the share offering had drawn nearly 51 million bids, exceeding the 45.5 million offered to the public. Stock in six of Adani’s other listed companies sank between 2 percent and 19 percent.
Early yesterday, Adani Enterprises was down by 5 percent. Stocks in four of Adani’s other listed companies were down by 10 percent and two others sank between 5 and 8 percent.
In a video address yesterday, Adani said the decision to scrap the share offering was made “to insulate the investors from potential losses.”
“For me, the interest of my investors is paramount and everything else is secondary,” he said.
Adani Enterprises said in a statement that it would withdraw the transaction and return the money to its investors.
The decision would not “have any impact on our existing operations and future plans,” it said, adding that the group’s balance sheet was “very healthy,” with strong cashflows and secure assets.
Adani made a vast fortune mining coal as energy-hungry India grew swiftly after its economy was liberalized in the 1990s. Adani companies operate airports in major cities, build roads, generate electricity, manufacture defense equipment, develop agricultural drones, sell cooking oil and run a media outlet.
Hindenburg said it was betting against the group, accusing it of “pulling the largest con in corporate history.”
It said it judged the seven key Adani listed companies to have an “85 percent downside, purely on a fundamental basis owing to sky-high valuations.”
Most of the allegations involved concerns about the group’s debt levels, activities of top executives, use of offshore shell companies to artificially boost share prices and past investigations into fraud.
The stock losses on Wednesday cost Adani his title as the richest man in Asia and in India. Adani also slid from a ranking of being the world’s third-richest man to the 13th, as his fortune plummeted to US$72 billion, according to Bloomberg’s Billionaire Index.
Prior to the Hindenburg report, his net worth was about US$120 billion.
Meanwhile, India’s central bank has asked local banks for details of their exposure to the Adani group of companies, government and banking sources said yesterday.
The Reserve Bank of India did not immediately respond to a request for comment.
The Indian banking sector’s direct exposure to the Adani group was just 0.6 percent, Societe Generale SA said in a report on Additional reporting by Reuters
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to