Gautam Adani pulls off $2.4bn share sale despite short-seller report

Indian billionaire Gautam Adani has completed a $2.4bn equity sale despite a short-seller report alleging fraud and stock manipulation at his industrial empire.

The share sale at Adani Enterprises, the magnate’s flagship group, became a test of investor faith after Hindenburg Research last week alleged financial misconduct across the Adani empire.

A series of institutions, including London-listed Jupiter Asset Management, had already committed to buying shares, and the sale received a major boost on Monday when Abu Dhabi’s International Holding Company said it would invest $400mn.

But in a sign that Adani Enterprises was still trying to drum up interest among Indian investors on the last day of the sale, the company bought full-page advertisements in several national newspapers.

Offers of more than Rs1mn ($12,234) from non-institutional investors accounted for more than 60 per cent of bids for the shares that were available to the public, according to exchange data. Brokers said there was strong demand from wealthy Indian investors, ensuring more than 90 per cent of the total shares on offer were sold. Shares in Adani Enterprises closed up about 2.8 per cent to Rs2,974.

“This looks like high-net-worth people Adani reached out to for support for the [offering] came through,” said one Mumbai-based broker, adding that domestic retail traders and Indian mutual funds had avoided the deal.

Hindenburg alleged that the Adani Group, whose businesses stretch from ports to data centres, used offshore entities in tax havens to inflate artificially the share prices of its listed companies, allowing them to take on more debt and “putting the entire group on a precarious financial footing”.

The report prompted a near-$70bn drop in the value of Adani companies listed in Mumbai and marks a rare challenge to one of the country’s most powerful moguls. The 60-year-old is India’s richest man and hails from Gujarat, the home state of Prime Minister Narendra Modi.

His companies have expanded rapidly, clinching infrastructure, energy, clean power and other deals in recent years in tandem with India’s growing economy.

Gautam Adani did not address Hindenburg’s allegations on Tuesday when he appeared at a ceremony in Haifa, Israel to mark the Indian group’s investment in the city’s port. The billionaire pledged to “transform” the port and continue to invest in Israel.

Despite Adani pulling off the sale on Tuesday, doubts among investors persist. The chief executive of Norway’s $1.3tn oil fund told the Financial Times on Tuesday that it had “very little exposure” to Adani and had sold down some holdings.

“We have sold out of quite a few [of Adani companies] and we have reduced in some of the others. So we have very, very little exposure compared with what you would have expected us to have,” Nicolai Tangen said.

According to the fund’s reference index, it should have owned about $800mn of shares in Adani as of Monday but instead has a “massive underweight position” leaving it with roughly $200mn of exposure, he added.

The oil fund, which on average owns 1.3 per cent of every listed stock globally, had holdings at the end of 2022 of 0.3 per cent in Adani Ports and Special Economic Zone, 0.17 per cent in Adani Total Gas and 0.14 per cent in Adani Green Energy.

At the end of 2019, it had a 0.75 per cent stake in Adani Ports, which it has since placed on its observation list because of its relationship with armed forces in Myanmar.