MSCI seeks feedback on Adani Group over Hindenburg Research's claims

Global index provider MSCI (Morgan Stanley Capital International) on Saturday said it is seeking feedback on Adani Group and associated securities and is aware of a report issued by short-seller Hindenburg Research, a Reuters report said.  

“MSCI is closely monitoring publicly available information regarding the situation and the factors that may impact the eligibility of those relevant securities for the MSCI Global Investable Market Indexes,” it said in a statement. 

All Adani group stocks, barring Adani Wilmar, are in the MSCI Global Standard Index and also FTSE Indices. Adani Ent, Adani Ports, Adani Trans, Adani Total Gas, Adani Power, ACC, Ambuja & Adani Green are present in MSCI Standard Index & FTSE World Indices. 

US-based short seller Hindenburg Research on Wednesday released a scathing report that accused the Adani Group of market manipulation and accounting fraud. The report said that the conglomerate is leading the “biggest con in corporate history”, which led to panic selling on Wednesday that eroded the cumulative market capitalisation of seven listed Adani Group companies by around Rs 1 lakh crore. 

By the end of Friday, Rs 2.37 lakh crore was wiped off from the group market capitalisation in a span of just two days. Adani Total Gas, the most vauled group stock, saw its m-cap falling by Rs 76,000 crore in two days; Adani Transmission  saw its m-cap plunging by Rs 63,700 crore. These two Adani group stocks were heavily battered in Friday's trade, tanking up to 15 per cent. In total, m-cap of 10 Adani group stocks have fallen 12 per cent to Rs 16.83 lakh crore from Rs 19.20 lakh crore as on January 24. 

MSCI’s statement further stated that it will decide on the treatment of Adani stocks indices after receiving feedback and consultation. 

On Friday, domestic markets regulator SEBI said it was studying the Hindenburg report as it may help its own probe into offshore fund holdings of Adani Group.

The Hindenburg report came at a time when the conglomerate planned a large scheduled fundraising attempt, in which it sought to raise a big amount of Rs 20,000-cr from investors to fund capital expenditure and reduce debt. On Thursday, Adani Group, in an official statement, said that its shareholders and investors were adversely impacted by the Hindenburg controversial report that alleged that the conglomerate was engaged in accounting fraud and stock manipulation for decades.

Adani Group said on Thursday it is evaluating "remedial and punitive action" under US and Indian laws.

In a statement to stocks exchanges, Adani Group head of legal, Jatin Jalundhwala, called the Hindenburg report "maliciously mischievous, (and) unresearched".

The fundraising attempt opened on Friday, instead of Wednesday, where the FPO got subscribed only 1 per cent on Day 1.  

Of the Rs 20,000 crore proceeds of the FPO, Rs 10,869 crore will be used for green hydrogen projects, work at the existing airports, and construction of a greenfield expressway. Another Rs 4,165 crore will go towards repayment of debt taken by its airports, road and solar project subsidiaries. 

On Friday, Adani Enterprises' scrip on BSE closed trading 18.5 per cent lower at Rs 2,762.