Adani Group crisis updates: Adani shares plunge almost 23%, lowest since March 2022

“While the decision to withdraw its flotation isn’t unique, and we understand floats get pulled for various reasons" the funds have been transferred back to its account, it said in a statement on Thursday. “IHC remain fully committed to being a transparent, responsible business, pursuing our strategy, and continuing our growth trajectory, as we capitalize on the opportunities ahead of us."

The founder of Mobius Capital Investors, Mark Mobius, told Reuters on Thursday (February 2) that the Adani Group was prudent to call off its $2.5 billion share sale.

Prithviraj Chavan, former chief minister of Maharashtra, demanded on Thursday (February 2) that the Reserve Bank of India or the Securities & Exchange Board of India (SEBI) look into the accusations of fraud against the Adani Group.

Adani Enterprises' stock fell by around 23 percent on Thursday (February 2), and was trading at its lowest level since March 2022 as a result of the allegations of accounting fraud and stock manipulation against the Adani Group.

Hindenburg Research, the financial research firm with an explosive name and a track record of sending the stock prices of its targets tumbling, is taking on one of the world's richest men.

Hindenburg is back in the headlines after last week accusing Indian conglomerate Adani Group of "a brazen stock manipulation and accounting fraud scheme." It cited two years of research, including talks with former Adani senior executives and reviews of thousands of documents. 

The Adani Group has blasted the accusations, calling them "a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India's highest courts."

Nevertheless, Hindenburg's scorching allegations have caused the fortune of Adani Group's founder, Gautam Adani, to slide by more than $34 billion in just a week, according to the Bloomberg Billionaires index. Here's a look at the firm behind all the movement:

WHAT IS IT? 

Hindenburg says it specialises in "forensic financial research." In layman's terms, it looks for corruption or fraud in the business world, such as accounting irregularities and bad actors in management. 

The Congress party has decided to hold nationwide district level protests on Monday, February 6, in front of the Life Insurance Corporation office and the State Bank of India office here over the Hindenburg report. 

"The government can't jeopardise the hard earned money of the people of India to profit the crony friends of the Prime Minister," said KC Venugopal, party general secretary. 

Opposition parties on Thursday agreed to jointly raise the issue of allegations of fraud against the Adani Group in Parliament but were yet to agree on the mode of inquiry into the Gujarat-based corporate major.

At a meeting of like-minded political parties convened by Congress President Mallikarjun Kharge, there was a general agreement on raising the Adani issue vigorously in both the Houses and force the government to take up the discussion on the Motion of Thanks on the President's Address from Monday.

Lord Jo Johnson, younger brother of former British prime minister Boris Johnson, has resigned his non-executive directorship of a UK-based investment firm linked with the now-withdrawn Adani Enterprises Follow-on Public Offer (FPO). 

'The Financial Times' newspaper referenced UK Companies House records to reveal that 51-year-old Lord Johnson had been appointed as a director of London-based Elara Capital Plc in June last year and resigned on Wednesday, the day when the Adani Group announced the withdrawal of the FPO. 

Elara, which described itself as a capital markets business raising funds for Indian corporates, was among the bookrunners on the FPO. Johnson insisted he has been assured of the company's "good standing" and has stepped down due to his own lack of "domain expertise". 

"I joined the board of Elara Capital, an India-focused investment firm based in London, as an independent non-executive director last June in the hope of making a contribution to UK-India trade and investment ties, which I have long supported and co-written a book about," Jo Johnson said in a statement after news of his resignation was announced by the newspaper. 

"I have consistently received assurances from Elara Capital that it is compliant with its legal obligations and in good standing with regulatory bodies. At the same time, I now recognise that this is a role that requires greater domain expertise in specialised areas of financial regulation than I anticipated and, accordingly, I have resigned from the board," said Johnson, a House of Lords peer. 

The Reserve Bank of India (RBI) has sought details about lenders' exposures to the Adani Group, banking sources said, a day after the conglomerate withdrew the Rs 20,000-crore follow on public offer (FPO) of its flagship firm Adani Enterprises amid the steep fall in its stock prices. 

On Wednesday, Swiss lender Credit Suisse stopped accepting bonds by Adani group companies as collaterals for margin lending. 

The going has been tough for the diversified conglomerate over the past week ever since US-based short seller Hindenburg Research levelled a slew of allegations about the group's operations, calling it the biggest corporate con ever. 

The Ahmedabad-headquartered group has denied all the allegations but failed to convince analysts and investors. 

Power and New & Renewable Energy Minister R K Singh on Thursday dismissed apprehensions about any impact of Adani group firms' stock rout on clean energy development, saying India has many such large companies in the sector. 

Singh's statement comes at a time when opposition party members have joined hands in both the houses of the Parliament demanding suspension of regular proceedings to discuss the allegations of fraud against the Adani Group. 

The proceedings of Lok Sabha as well as Rajya Sabha were completely washed out on Thursday due to the issue. 

Asked about the impact of the issue on clean energy sector, Singh told reporters in a press conference, "I have the most robust renewable energy capacity in the world and that means that I have at least 15-16 large companies which are at the level of global companies. It will not impact us in any way. We have many large companies and those are some of the biggest renewable energy companies in the world."

As it battles the aftermath of Hindenburg report, the Adani Group has received a request from Bangladesh to lower import price for coal. 

"We are following Newcastle index pricing for importing coal," said Nasrul Hamid, Bangladesh's state minister for energy and power. Hamid was quoted by Reuters

"Now that we are getting a discount on the pricing for other coal plants, such as the Payra power plant, we want to open the door for negotiations with Adani, too. We have sent them a letter to discuss the issue."

Lawmakers from opposition parties in India shouted slogans against the Adani Group in country's parliament on Thursday. The sloganeering took place just a day after the conglomerate cancelled its USD 2.5 billion stock offering.

The Congress party is pressing Prime Minister Narendra Modi to address the matter of alleged use of tax havens by Adani Group and is demanding a judicial probe into the issues raised in the Hindenburg report.

Jupiter Fund Management, an anchor investor in Adani Enterprises' now-cancelled FPO declined to comment on the current crisis when approached by Reuters.

Jupiter was the sole UK-listed fund manager who had backed Adani's share offering.

The crisis in Adani Group has sent shockwaves in India as well as across the world. After the the much-hyped FPO was called-off, investors and analysts are now reacting on the situation.

SAMEER KALRA, FOUNDER, TARGET INVESTING, MUMBAI:

"The decision on reversing on FPO has made even the neutral investors a bit nervous leading to higher sell orders in many of the group companies. The regulator and various agencies reviewing the situation puts more volatility and uncertainty ahead."

IPEK OZKARDESKAYA, SENIOR MARKET ANALYST, SWISSQUOTE BANK, SWITZERLAND:

"Indian shares were trading at a premium last year and that premium is now at risk as investors realise maybe the underlying fundamentals are not as strong as many thought. Adani may have started a confidence crisis in Indian shares and that could have broader market implications."

MARK MOBIUS, FOUNDER, MOBIUS CAPITAL INVESTORS, LONDON:

"It made sense to cancel the new issue since in all probability it would not have been successful in view of the negative news.

"Probably they will try to answer all the accusations and reschedule the share sale. Of course, if regulators and other authorities weigh and make some negative comments then we will be in another game.

"A full disclosure of balance sheets and particularly details regarding debtors (is necessary)."

PANKAJ PATHAK, FUND MANAGER - FIXED INCOME, QUANTUM ASSET MANAGEMENT, MUMBAI:

"Everybody's keeping a very close eye on (Adani's) debts. But on the domestic debt side, we hardly see any impact on the broader corporate bond market... In the domestic market, it’s not widely held, except for banks and banks do not mark-to-market and so we will not know the real impact until the debt comes due."

All of them were quoted by Reuters.

The dollar bonds issued by Adani Green Energy Ltd plunged to a record low on Thursday.  The bonds maturing in September 2024 led the losses. They fell by 11.69 cents to 60.56 cents.

This is the lowest value since their issuance.

Adani Group is still in the throes of the crisis kicked off by the Hindenburg report. The market losses suffered by the group have crossed USD 100 billion mark