NEW DELHI (Bloomberg) -- The stock rout roiling Gautam Adani’s indebted conglomerate entered a third week, with the billionaire and his family prepaying $1.11 billion worth of borrowings backed by shares in a bid to restore investor confidence.
Six of the group’s 10 stocks ended lower in Mumbai on Monday, with Adani Transmission Ltd. and Adani Total Gas Ltd. leading the losses. The meltdown since US short-seller Hindenburg Research made fraud allegations against the ports-to-power group in a Jan. 24 report has wiped out $117 billion, or almost half of the market value of its companies. Adani has repeatedly denied the claims.
Worries about the conglomerate’s access to funding rose further after Bloomberg reported Saturday that Adani Enterprises Ltd., its flagship firm, has shelved a bond sale just days after it abandoned a record stock offering. S&P Global Ratings also has cut its outlook on a port operator and an electricity distributor in the group, just as some of the companies are due to release quarterly earnings this week, giving investors a chance to scrutinize the conglomerate’s financial health.
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The founders’ early payment of borrowings will help release 11.77 million shares in Adani Transmission Ltd. and as many as 168.27 million shares of Adani Ports & Special Economic Zone Ltd., the group said in a statement Monday. Adani Ports’ stock erased intraday declines to finish 9.3% higher, its biggest gain since April 2021. The flagship ended 0.9% lower and is now down 54% since the rout began.
The ramifications of the selloff are spreading far and wide as concerns grow about the exposure that financial institutions and investors have to Adani. The tumult has disrupted parliament and India’s main opposition party is ramping up pressure on Prime Minister Narendra Modi over his silence on the issue. It staged some protests on Monday to highlight the risk to small investors.
Hindenburg Research accused the group of “brazen” market manipulation and accounting fraud, claiming that a web of Adani-family controlled offshore shell entities in tax havens were used to facilitate corruption, money laundering and taxpayer theft.
The conglomerate has called the report “bogus,” and threatened legal action. Adani gave a video speech last week stating that the group’s balance sheet is healthy.