Adani’s share sale U-turn spares only some blushes

<html xmlns=""><head><title>BREAKINGVIEWS-Adani’s share sale U-turn spares only some blushes</title></head><body>

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Una Galani

HONG KONG, Feb 2 (Reuters Breakingviews) -Markets have given Gautam Adani a big bloody nose, and his backers a partial reprieve. The tycoon’s decision on Wednesday to pull the $2.4 billion share sale at his flagship Adani Enterprises ADEL.NS was all but forced after a 28% plunge in the company’s share price the day after it closed the books. Cancelling the deal is marginally better than stuffing above-market-price stock down investors’ throats. The U-turn is nonetheless a key sign the support for the Indian industrialist has a limit.

His global backers were in a tight spot after signing up to buy stock. The Abu Dhabi Investment Authority, a sovereign wealth fund, popped up as an anchor investor on the deal before the shares were dragged down by Hindenburg Research’s short-selling attack accusing it of fraud and stock manipulation, allegations which Adani dismisses. Sure, ADIA only stumped up around $20 million, but as a well-respected investor, any backing for a group largely shunned by big established Indian institutions was surprising.

Abu Dhabi conglomerate International Holding Company IHC.AD committed to buy 16% of the total deal, even after the shares were falling as part of a wider $90 billion rout across the seven core Adani group companies. That underscores the strategic nature of its relationship with its Indian peer it has previously ploughed billions into. The collective mess threatened to embarrass the United Arab Emirates, as well as Indian state entities that were buying, including Life Insurance Corporation LIFI.NS.

The nixed deal will also come as a relief for Adani’s advisers, particularly Wall Street investment bank Jefferies JEF.N, the only non-Indian on the mandate. Cancelling the share sale spares it, and others including ICICI Bank ICBK.NS and Axis Bank AXBK.NS, from any potential liability exposure that might have arisen from closing a deal without doing due diligence on the issues Hindenburg raised, a risk noted by hedge fund boss Bill Ackman. That danger was magnified on Wednesday with India’s regulator looking into possible irregularities around the share sale, Reuters reported exclusively citing a source with direct knowledge of the matter.

Adani can get by without the proceeds. Less than one quarter was due to pay down borrowings at the issuer and its unlisted subsidiaries, including Adani Airport and Adani Road. More than half of the money was to fund capital expenditure including in green hydrogen and airport facility improvements. Now, though, funding markets are starting to close to the man who was briefly the world’s third richest. It signals that support for Adani from his big backers has a limit, and that the controversy has room to run.

Follow @ugalani on Twitter


Adani Enterprises on Feb. 1 said it is withdrawing its $2.4 billion share sale due to the “unprecedented situation and the current market volatility”. The deal had already been fully subscribed.

The company’s shares fell 28% to 2,135 rupees each on the same day before the announcement. The bottom of the previously guided price range for the offering was 3,112 rupees.

Investors had bid for 1.12 times the shares on offer. Large non-institutional investors submitted bids for almost five times the shares offered or reserved to them, while employees bid for 0.55 times and individual retail investors for 0.12 times. International Holding Company, the Abu Dhabi conglomerate, had said that it would be investing 1.4 billion dirhams, over $380 million, to subscribe to 16% of the issue.

Editing by Antony Currie and Thomas Shum


Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.

Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.

Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.

Nous utilisons des cookies pour vous donner la meilleure expérience possible de notre site internet. En savoir plus ou modifier vos paramètres de cookies.

Avertissement sur les risques : votre capital est à risque. Les produits à effet de levier ne sont pas recommandés pour tous. Veuillez consulter notre Divulgation des risques