Indian tycoon Gautam Adani and his family have posted funds to repay $1.1 billion in debt backed by shares in several of his companies, as the billionaire battles to overcome a crisis that has wiped $100bn from the value of his business empire. Eliminated more than
Adani, one of India’s most powerful moguls whose businesses span from ports to airports to energy, has been dumped by US short seller Hindenburg after accusing the group of share price manipulation and accounting fraud. Adani has denied the allegations.
In a statement on Monday, Adani Group said its founders and their families – known as majority shareholders and promoters in Adani companies in India – had posted funds to repay a $1.1 billion loan that is due by September 2024. was not due.
An Adani Group official told the Financial Times that the loan was from several banks, including Citibank, JP Morgan, Deutsche Bank, Barclays and Japan’s SMBC Group. All the banks declined to comment.
The pressure on Adani’s 10 listed companies is further compounded by the fact that the group’s shares were pledged as collateral for the loan. Data from the Bombay Stock Exchange showed that SB Adani Family Trust had pledged stock in several listed companies as collateral.
Adani Group had not responded to queries about which specific entity had received the loan till the time of publication.
Adani said the early repayment of the loan would result in issuance of 168 million shares in Adani Ports, 27 million in Adani Green Energy and 12 million in Adani Transmission. The sum of Adani’s stake in the listed companies was 12 per cent, 3 per cent and 1.4 per cent, respectively.
Sameer Arora, founder of investment firm Helios Capital, said that by paying off the loan early, Adani was trying to demonstrate the financial strength of his empire.
Arora said, “He’s showing you that I have $1.1 billion to give back to you.” “It shows that they are not in such a desperate situation”.
While Adani has issued a lengthy rebuttal to Hindenburg’s allegations, that has done nothing to ease the crisis engulfing the group. Since the allegations were published on January 24, sales in Adani’s listed businesses have eroded ₹9.4 trillion ($114 billion), or about 50 percent of their value.
In its statement on Monday, the Indian conglomerate said it was making the early repayment “in light of recent market volatility and in continuation of promoters’ commitment to reduce overall promoter leverage backed by Adani listed company shares”. It added that the promoters had “assured” to “pre-pay all share-backed financing”.
Shares of flagship business Adani Enterprises, which was forced into a $2.4 billion follow-on share sale last week, have fallen 54 per cent since the release of the report.
Adani has sought to reassure investors that it was not under pressure to cover losses on share-backed loans to its businesses, dismissing claims circulating in the Indian media as “market rumours”. .
Adani, widely considered an ally of Prime Minister Narendra Modi, is coming under increasing political pressure. Lawmakers from the Congress party and other opposition groups staged a protest on the grounds of Parliament in New Delhi on Monday, demanding that the Modi government allow MPs to discuss the Adani case.
For the third consecutive working day, Parliament – which is controlled by Modi’s Bharatiya Janata Party – was adjourned without any discussion.
Opposition MPs raised slogans of “Down with the Adani government” and “Shame on the Adani government” and “Stop looting the poor”.
The intensity of the sell-off in Adani’s shares has prompted Indian authorities to try to calm investors. The Securities and Exchange Board of India said over the weekend that it was aware of “abnormal price movement in the trading group’s shares” and vowed to investigate and take “appropriate” action if it comes to Sebi’s notice . The regulator did not name Adani.
Additional reporting by Kana Inagaki in Tokyo
