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Adani pulls through with $2.5 billion share sale amid a stock-market storm sparked by Hindenburg’s fraud allegations

Gautam Adani talking while seated.Gautam Adani.

Amit Dave/Reuters

  • Billionaire Gautam Adani successfully completed the $2.5 billion share sale of his flagship company on Tuesday, per Bloomberg.
  • The stock offering became a crucial confidence test after a short-seller report triggered a massive rout in Adani group stocks. 
  • The sale pushed through thanks to late institutional bids, while retail participation remained weak, according to Bloomberg.

India’s embattled Adani Group pulled through with the $2.5 billion share sale of its flagship company even after the conglomerate faced a market rout amid fraud allegations by a short seller.

The offering by Adani Enterprises, the country’s largest follow-on share issue, was fully subscribed Tuesday, thanks to some late bids from institutional investors, Bloomberg reported. Demand from retail buyers remained poor, according to the report, following a massive selloff in Adani companies over the past week.

Billionaire Gautam Adani’s business empire came under attack over the past week from Hindenburg Research, which in a report published January 24 accused the conglomerate of  “pulling the largest con in corporate history” — saying the group had engaged in “brazen stock manipulation” and accounting fraud.

That sent the shares of Adani group companies tumbling in the following days, wiping out close to $70 billion in market value. The group dismissed the report as “a malicious combination of selective misinformation and stale, baseless and discredited allegations,” according to a statement by CFO Jugeshinder Singh last week.  

The secondary share sale’s successful completion Tuesday comes after the group had only secured 3% in bids the day before, Reuters reported.

“This looks like high-net-worth people Adani reached out to for support for the [offering] came through,” one Mumbai-based broker told the Financial Times on Tuesday. 

The success of the stock offering will help the company widen its shareholder base and cut its debt. But it’s also a sign that investors have stuck by the Indian conglomerate despite Hindenburg’s allegations.

The share sale was a critical moment for founder Adani, Asia’s richest person who saw his wealth sink by nearly a quarter last week in the aftermath of the short-seller report. But the drop in fortunes is not just for the group’s boss, as other Indian billionaires are also suffering from falling share prices in the companies they have top stakes in. 

The decline in South Asian market sentiment is also reflected in India’s benchmark share index, the Sensex, which is down by almost 3% so far this year.

Read the original article on Business Insider