Adani Group may not agree to accept but the side effects of Hindenburg's report are now clearly visible.
Adani Group may not agree to accept but the side effects of Hindenburg's report are now clearly visible. These are:
- Biggest side effect: Announcement of cancellation of FPO of Adani Enterprises.
- Second side effect: Continuous decrease in market cap of listed companies of Adani Group.
- Third side effect: Gautam Adani out of the list of top 15 richest
- Fourth side effect: SEBI has started investigating Hindenburg's allegations.
- Fifth side effect: Reserve Bank of India has asked all the banks for the details of loans given to Adani Group.
- And the sixth side effect: Global Investment Bank Credit Suisse has reduced the value of Adani Group's bonds to zero.
These side effects show that even though the Adani group is calling Hindenburg's revelations baseless. But the trust of the market on Adani Group has been broken. We will show you today the analysis of both the cause and effect of every side effect which confirms it.
We are starting with the latest side effects. February 1, 2023, when the budget was being presented in the Parliament and the share market was witnessing a boom. Then Adani Group owner Gautam Adani made such an announcement which surprised everyone.
Adani Group has withdrawn the follow-on public offer (FPO) of Adani Enterprises. This FPO of Adani Group was the biggest FPO till date..which was fully subscribed means sold. And through this FPO, Adani Enterprises had also acquired 20 thousand crore rupees. Adani Group announced that investors' money will be returned.
The FPO which was launched by Adani Group with great fanfare on 27th January, and the FPO which was sold in four days, was cancelled despite that. As surprising as the return of the FPO of Adani Enterprises was how it got oversubscribed. Why are we saying this? Let us tell you the reason.
On January 25, the price of one share of Adani Enterprises was Rs 3388.95. The price band of FPO of Adani Enterprises was kept at Rs 3,112 to Rs 3,276 per share. On the day i.e. January 27, when the FPO was launched, the stock of Adani Enterprises fell to Rs 2761.45. Means about Rs 350 less than the price band of FPO. Then on January 30, when the stock market reopened, the stock of Adani Enterprises went up to Rs 2892.85. This was also less than the price band of FPO. And on the last day of FPO i.e. January 31, the share of Adani Enterprises became Rs 2973.90. But even then it was about Rs 150 less than the price band of FPO.
So here's one thing which just doesn't fit. That is, when the share rate of Adani Enterprises was less than the price band of FPO, then how was the FPO sold? And after all, who are those investors who bought the FPO? We have already given you a hint about this. According to experts, this is also one of the reasons for withdrawing the FPO.
Gautam Adani himself has said that the decision to withdraw the FPO has been taken to save investors from loss. But is this true or is the truth something else? Because there has been another big disclosure regarding this FPO. This has been disclosed by Forbes who published a report titled: There's Evidence That The Adani Group Likely Bought Into Its Own $2.5 Billion Share Sale. The report claimed that Adani Group itself engaged in buying its FPOs from behind the scenes. According to the report, the companies through which the FPO was being procured on behalf of Adani Group include Elara Capital India Pvt Ltd and a brokerage firm Monarch Networth Capital. Both these companies are also mentioned in the report of Hindenburg Research.
According to Hindenburg Research's allegations, Elara Capital's India Opportunity Fund holds publicly traded shares of Adani's companies worth $3 billion. These also include shares of Adani Enterprises. Whereas Monarch Networth Capital is an Indian brokerage firm. The Hindenburg Report claims that it is partially owned by Adani Properties Pvt Ltd since 2016. The Hindenburg report alleges that these two companies have facilitated Adani Group's accounting fraud and stock market manipulation. According to the Forbes report, these two companies were actively involved in the $2.5 billion sale offer of Adani Enterprises, which has also been mentioned by Adani Enterprises in the statement of FPO.
Both the companies were among the ten underwriters of the FPO's sales agreement. In simple language, underwriters are those companies which guarantee to invest in an FPO and also play their role in the sale of FPO. As per the FPO statement of Adani Enterprises, drafting and approval responsibilities were assigned to Elara Capital whereas Monarch was entrusted with the task of marketing the FPO to non-institutional investors. On the basis of this, Forbes has alleged that Adani Group itself played the game of buying FPO from behind the scenes. Although it is difficult to say whether the revelations of Forbes have anything to do with Adani Group's decision to withdraw its FPO or not.
Within a week of the Hindenburg report, the Adani Group has plunged in value. There has been a huge fall in the share prices of the listed companies of Adani Group. Since the Hindenburg report came out on January 24, till now the market capital of Adani Group has decreased by more than $100 billion. Number 3 Gautam Adani has now reached number sixteen in the ranking of the richest people on January 25. In the last one week, the personal wealth of the country's richest Gautam Adani has come down by about 44 percent from $118.4 billion to $64.6 billion.
And now politics has also started regarding this, even though the government has kept silent regarding the Hindenburg report. But the opposition has started raising questions. Today in the Parliament, echoes of the Hindenburg Report and allegations against Adani Group were heard. There was a lot of commotion. The opposition has demanded an inquiry into the allegations against Adani Group. Opposition MPs created ruckus demanding a discussion on it, due to which the proceedings of the Parliament had to be adjourned for the whole day. The opposition wants a parliamentary committee to be formed regarding the Hindenburg report against Adani Group.
READ | SBI has given loans worth Rs 21,000 crore to Adani group companies, says report
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