The tycoon’s decision to scrap a multi-billion dollar share sale this week could impact investor confidence in the emerging economy.
Just 10 days ago, Gautam Adani and his sprawling energy-to-ports empire looked invincible. Now, a damning short-seller attack has left the billionaire battling the worst crisis of his corporate life — and is raising bigger, darker questions about India’s credibility as a global growth engine and a destination for international investors.
“Things are moving very fast in the market, with a potentially major reassessment of the risks of investing in Indian equities by international investors,” said Singapore-based Gary Dugan, chief executive officer of Global CIO Office, an asset manager and financial advisory firm.Mr Adani, 60, has been close to Prime Minister Narendra Modi for decades.
Hindenburg, in its report, alleged that Adani used offshore shells for money laundering and siphoned from listed companies. The turmoil has not only hammered Adani Group shares but is also hitting banks that have given loans to the companies. Government-controlled State Bank of India has tumbled 11 per cent since the Hindenburg report came out.Foreign institutional investors pulled a net $US2 billion out of India’s stock market from the country January 27 through January 31, the biggest three-day selloff since March, according to data compiled by Bloomberg.
“This does not reflect the overall viability of the Indian market and economy,” said Mr Mobius, co-founder of Mobius Capital Partners. “We don’t make decisions based on the index but on the viability of individual companies over the long term.” Along with developing more than 5000 kilometres of the country’s road network, Adani Group is the largest private operator of India’s sea and airports, controlling 33 per cent of Indian air cargo traffic and 24 per cent of its shipping capacity, according to company presentations.
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