Indian market regulator examining Adani share rout, source says
Adds details of share withdrawal, links to related stories and graphics
By Jayshree P Upadhyay
MUMBAI, Feb 1 (Reuters) -India's market regulator is examining a recent crash in shares of Adani Group and looking into any possible irregularities in a share sale by its flagship company, a source with direct knowledge of the matter told Reuters on Wednesday.
The Securities and Exchange Board of India's (SEBI) examination comes on a day when Adani Group shares plunged, extending losses in seven listed companies to $86 billion in the wake of a U.S. short-seller report.
Late on Wednesday, Gautam Adani's flagship firm called offits share sale in a dramatic reversal, citing market conditions.
Spokespeople for Adani Group and SEBI did not immediately respond to a request for comment.
SEBI is undertaking a full-scale examination of the fall in shares, the source said, declining to be identified as the matter is confidential.
The share plunge was sparked by a report by Hindenburg Research last week which alleged improper use by the Adani Group of offshore tax havens and stock manipulation. It also raised concerns about high debt and the valuations of the seven listed Adani companies.
The group has denied the allegations, saying the short-seller's narrative of stock manipulation has "no basis" and stems from an ignorance of Indian law. It has always made the necessary regulatory disclosures, it added.
The source told Reuters the Indian market regulator is also looking into any possible price manipulation of Adani group stocks, as well as examining possible irregularities in the $2.5 billion share sale of the flagship firm Adani Enterprises ADEL.NS, which concluded on Tuesday.
While the share offering's book building process was covered only 3% on Monday, it was fully subscribed on Tuesday. As foreign institutional investors and corporate funds flooded in, the group managed to secure investments even though Adani Enterprises traded below the share sale's offer price.
On Wednesday, a day after the share sale closed, Adani Enterprises ADEL.NS plunged 28%, bringing its losses since the Hindenburg report to more than $18 billion. Adani Ports and Special Economic Zone APSE.NS dropped 19%. Both stocks marked their worst day ever.
In a statement withdrawing the issue Wednesday night, Adani said "the market has been unprecedented, and our stock price has fluctuated over the course of the day. Given these extraordinary circumstances, the company’s board felt that going ahead with the issue will not be morally correct."
The first source added that SEBI was also looking into allegations of dealings between Adani Group and related entities that were cited in the Hindenburg report.
Adani said in its rebuttal to Hindenburg's report that: "All transactions entered into by us with entities who qualify as 'related parties' under Indian laws and accounting standards have been duly disclosed by us."
"All key departments - corporate finance, surveillance department at the regulator are examining the share price fall. Exchanges are also sending a report," said a second source familiar with the matter.
NEWSMAKER-India's Gautam Adani: Asia's richest man in the eye of a storm nL4N34C219
EXPLAINER-Adani vs Hindenburg: What you need to knownL1N34H23F
EXPLAINER-Who is behind Hindenburg, the company that is shorting Adani?nL1N34A1QH
Hindenburg shorts India's Adani citing debt, accounting concerns; shares plungenL4N34A2NN
India's Adani Group says evaluating action against Hindenburg ResearchnL1N34B0AE
FACTBOX-Adani slips in world's richest rankingsnL1N34C0NR
India's Adani hits back at Hindenburg, insists made full disclosurenL1N34E0B7
Indian regulator looking into $86 bln Adani share wipeoutnL1N34H08N
As billionaire battles short-seller, 'IndiaStandsWithAdani' trends onlinenL4N34G34L
GRAPHIC-Adani stock rout deepens Adani stock rout deepenshttps://tmsnrt.rs/3HJpSMJ
GRAPHIC-Gautam Adani slips to world's eighth richest personhttps://tmsnrt.rs/3RiUJCV
GRAPHIC-Adani Group's ballooning debthttps://tmsnrt.rs/3HivFr3
GRAPHIC-Adani firms' two-day plunge after Hindenburg report https://tmsnrt.rs/405EHAn
Reporting by Jayshree P. Upadhyay
Editing by Ira Dugal, Aditya Kalra and Mark Potter
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