Adani Companies Plan $2.6 Billion Stock Sale in Wake of Market Rout
The Indian conglomerate was hit hard by a short-seller report earlier this year
Two companies in India’s Adani Group are planning to raise as much as $2.6 billion from share sales, months after a scathing short-seller report led to a sharp loss in the conglomerate’s market value.
Adani Enterprises, the group’s flagship company, wants to raise $1.6 billion through a secondary share sale while electricity generator Adani Transmission 539254 -3.49%decrease; red down pointing triangle is planning a $1 billion deal, they said through separate filings on Saturday. The two companies will need shareholder approval for the deals to go ahead.
Adani Enterprises canceled a previous plan to raise as much as $2.5 billion from investors on Feb. 1, just over a week after U.S.-based short seller Hindenburg Research published a report accusing the conglomerate of market manipulation, among other things. Adani Group 512599 -1.00%decrease; red down pointing triangle has denied the allegations.
The Hindenburg report caused the seven listed companies bearing Adani’s name to lose around half of their market value—and led to a sharp loss of wealth for Gautam Adani, the group’s 60-year founder. Mr. Adani and other executives have since taken steps to soothe investors’ nerves, including taking a series of trips to meet bond investors and announcing the early repayment of around $2.65 billion of debt backed by Adani shares.
They have also attracted a $1.9 billion investment from GQG Partners, a Fort Lauderdale, Fla.-based asset manager. The firm bought shares in various Adani companies from a trust linked to the Adani family.
The Hindenburg report led to a fallout beyond the stock market, with politicians from India’s opposition parties disrupting to put pressure on the government to investigate the accusations and the country’s Supreme Court opening a probe into the market unrest. The court is waiting for a report from the country’s market regulator, which has asked for more time, citing difficulties in obtaining the information it needs.
Hindenburg, founded by activist investor Nathan Anderson, has published several high-profile reports that have had a major impact on stock prices. On May 2, the firm targeted Icahn Enterprises, the vehicle of veteran activist investor Carl Icahn. The company’s shares lost more than a third of their value in the days after the report was published, although they have since recovered some of that loss.
Both Adani Enterprises and Adani Transmission plan on raising funds through so-called qualified institutional placements, which restrict them to selling shares to domestic investors.
Adani Green Energy, the group’s renewable-energy unit, was also considering a similar plan but is postponing the decision until May 24, the company said in a filing.
Earlier this month, Adani Enterprises reported a jump in quarterly earnings compared to last year. Adani Transmission is due to release its quarterly results next week.
Adani Group didn’t immediately respond to a request for comment.