Shares of Adani group companies were in the red in early trades on a report by Bloomberg that said that US regulators were enquiring into statements made by the group to investors with large holdings in the group.
The shares were trading 2.5-7.8 per cent down, with Adani Enterprises being the worst hit. It was also the worst-performing stock on the Nifty50 index, trading 7.8 per cent lower while the benchmark index was trading flat with a negative bias.
The Bloomberg report said that the US Securities and Exchange Commission as well as the US Attorney’s Office in Brooklyn, New York, were undertaking probes along the same lines. They were enquiring with investors about what Adani group’s executives had told them during their interactions
Following some damaging allegations made by short-seller Hindenburg in January, including accusations of round-tripping by group companies and corporate governance lapses, Adani group companies’ stocks saw substantial erosion in value. The group was forced to abandon a Rs 20,000-crore follow-on public offering by Adani Enterprises, following very little interest from retail investors. It had to push back several expansion plans the FPO was to fund.
Subsequently, as a damage control exercise, the group’s top management undertook several road shows in the US, Hong Kong, Singapore and in India refuting the Hindenburg’s allegations and showcasing the robustness of its operations.
It also prepaid several short-term maturing debt, including a small part of the bridge loan taken to finance the acquisition of ACC and Ambuja Cements, while it also redeemed pledges made by promoter entities.
It managed to raise over Rs 15,000 crore by selling small chunks of stake in four group companies to GQG Partners, further bolstering its narrative as a group with stable operations on whom investors could rely.
In recent weeks the group has regained enough confidence to revisit its expansion plans and negotiate loans with Indian and foreign banks.