Adani launches a major share sale in the face of allegations of fraud

Indian billionaire Gautam Adani is set to launch a major share sale on Friday in the face of fraud allegations from a short seller in the United States.

Adani Enterprises, the flagship of an empire whose ports extend to coal, plans to raise up to 200 billion rupees ($2.4 billion) in a share sale designed to show the company can attract international investors.

But the fundraiser was overshadowed by allegations from short-seller Hindenburg Research that Adani group Engaged in stock price manipulation and accounting fraud for decades.

London-listed Jupiter Asset Management, BNP Paribas, Societe Generale and Goldman Sachs are among the institutions whose shares have already been allocated, according to a statement from Adani before the allegations were made public on Wednesday.

One investor told the Financial Times that they are “aware” of Short Selling Report by Hindenburg and that they were “taking that into consideration”.

The share sale is designed to show the broader appeal of the Adani Group, which is closely owned by related entities, Mauritius-based opaque funds and state-controlled funds such as the Abu Dhabi Investment Authority.

If Western investors refuse, there is potential for more support from traditional allies. A spokesman for the group, Abu Dhabi’s largest listed company, International Holding Company, said it was “studying and studying the opportunity”. The International Humanitarian City invested $2 billion in Adani’s business last year.

Efforts to attract international investors come after shares in Adani Enterprises jumped more than 3,300 percent in three years, prompting the group to announce plans last year to increase the amount of freely traded shares.

International Humanitarian City was among the beneficiaries of an explosive stock price performance. Abu Dhabi company He previously told the Financial Times Its investment in Adani helped achieve last year’s results.

Headed by the UAE National Security Adviser, Sheikh Tahnoon bin Zayed Al Nahyan, it has turned into a behemoth with a market capitalization of $240 billion over the past two years.

But the 40,000 percent increase in IHC’s share price since 2019 has also made bankers worried about the apparent misalignment between its market capitalization and underlying economic fundamentals.

Adani is moving ahead with the sale after the group’s seven listed companies divested $10.8 billion in market value on Wednesday in the wake of the Hindenburg allegations. The Indian stock market was closed on Thursday for a public holiday.

The Adani Group denied the allegations, calling the report “a virulent mix of selective misinformation and meaningless, unsubstantiated and discredited allegations” intended to “undermine the reputation of the Adani Group” and damage the claim to sell the shares.

Public bidding on the shares is scheduled to begin on Friday, and the sale is expected to be completed next Tuesday. The 6.3 million shares, or more than a third of the 60 billion rupees ($735 million) offered to institutional investors, have been allocated to Maybank Securities, the Singapore brokerage arm of the Malaysian lender of the same name.

It has been allocated several Mauritius-based funds, including Elm Park Fund Limited, which was the second largest investor after Maybank. The remaining shares will target Indian retail investors.

A self-made entrepreneur, Adani, who started out as a commodities trader, has built India’s largest private infrastructure cluster with around ten ports and eight airports, and is expanding at a rapid pace. The Adani Group has pledged to become one of the largest green energy companies in the world by investing $70 billion by 2030.

On Thursday, the group said it was considering legal action against the Hindenburg.

“We are evaluating relevant provisions under US and Indian laws to take corrective and punitive action against Hindenburg Research,” Jatin Gallonhwala, Adani Group’s chief legal officer, said in a statement.

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