Adani loses crown as Asia’s richest man as stock market slump deepens to $84 billion

BENGALURU, Feb 1 (Reuters) – Shares in Indian tycoon Gautam Adani’s conglomerate slumped again on Wednesday as his company plummeted to $84 billion after reports of short selling in the United States, The billionaire also lost his title as Asia’s richest man

Wednesday’s stock drop pushed Adani down to No. 15 on the Forbes list of the richest people, with an estimated net worth of $76.8 billion, below rival Mukesh Ambani, chairman of Reliance Industries Ltd (RELI.NS). Mukesh Ambani ranks ninth with a net worth of $83.6 billion.

Adani ranked third ahead of a critical report by US bear Hindenburg.

The losses mark a huge setback for Adani, a school dropout turned billionaire whose business interests stretch from ports and airports to mining and cement. Now, the tycoon is trying to stabilize his business and defend his reputation.

The group’s $2.5 billion sale of shares to flagship Adani Enterprises on Tuesday came just a day after it managed to win backing from investors, which some took as a sign of investor confidence.

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A Hindenburg Research report last week said Adani Group improperly used offshore tax havens and manipulated shares. It also raised concerns about high debt and the valuation of seven Adani-listed companies.

The group has denied the allegations, saying the short-seller’s claims of stock manipulation are “baseless” and stem from ignorance of Indian law. It added that it has been making the necessary regulatory disclosures.

Shares in Adani Enterprises (ADEL.NS), commonly known as the Adani business incubator, plunged 30% on Wednesday. Adani Power (ADAN.NS) fell 5 percent, while Adani Total Gas (ADAG.NS) fell 10 percent, below its daily price limit.

Adani Transmission (ADAI.NS) fell 6 percent and Adani Ports and Special Economic Zone (APSE.NS) fell 20 percent.

Adani Total Gas, a joint venture with France’s Total (TTEF.PA), was the biggest victim of the short selling report, losing about $27 billion.

Ambareesh Baliga, an independent market analyst based in Mumbai, said: “There was a small rebound yesterday after the completion of the stock sale, and while it looked unlikely at some point, the weaker sentiment is now after the blockbuster Hindenburg report. Market sentiment is becoming evident again.”

“The fact that the share price fell despite Adani’s rebuttal is a clear sign that investor sentiment has taken some damage. It will take a while to stabilize,” Baliga added.

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Underscoring nervousness in some quarters, Bloomberg reported on Wednesday that Credit Suisse (CSGN.S) had stopped accepting bonds from Adani Group companies as collateral for margin loans to its private banking clients.

Deven Choksey, managing director of KR Choksey Shares and Securities, said that was a big factor in Wednesday’s slide.

Credit Suisse had no immediate comment.

The scrutiny of the conglomerate is intensifying, with Australia’s regulator saying on Wednesday it would review Hindenburg’s allegations to determine whether further investigations are warranted.

The data also showed that foreign investors sold a net $1.5 billion worth of Indian stocks after the Hindenburg report, the biggest four-day outflow since Sept. 17. 30.

Adani Group’s headaches are expected to persist for some time.

India’s markets regulator, which has been probing the conglomerate’s dealings, said it would include Hindenburg’s report in its own preliminary probe.

State Life Insurance Company (LIC) (LIFI.NS) said on Monday it would seek clarification from Adani’s management on the short-selling report. However, the insurance giant was the lead investor in the Adani Enterprises share sale.

In its note, Hindenburg said it had shorted U.S. bonds and Adani Group’s non-India-traded derivatives.

Reporting by Chris Thomas in Bengaluru and Aditi Shah in New Delhi; Additional reporting by Bharath Rajeshwaran and Aditya Kalra; Editing by Edwina Gibbs and Mark Potter

Our Standards: The Thomson Reuters Trust Principles.

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