As the ailing conglomerate fights market manipulation charges, MSCI is assessing Adani Group stocks, stopping a brief surge. The US-based MSCI said the assessment was prompted by investor concerns regarding the “eligibility and free float determination of particular stocks” related to the Adani Group. “MSCI has judged that the characteristics of some investors have sufficient ambiguity that they should no longer be labelled as free float pursuant to our methodology,” the firm noted.
This decision prompted a free float examination of Adani Group securities. Morgan Stanley Capital Overseas (MSCI) defines a free float as the percentage of shares available to international investors in share markets. The corporate empire of Indian billionaire Gautam Adani lost approximately $120bn when US short-selling investment organization Hindenburg Research accused it of fraudulently inflating share prices on January 24. Adani Enterprises cancelled a $2.5bn stock offering after the news. This week, the firm repaid $1.1bn in early loans to reassure investors. After the MSCI announcement, nine of the 10 listed firms tied to the firm fell back into the red in early Mumbai trade, with flagship Adani Enterprises falling 10% after recovering from multi-year lows. Adani Transmission, Total Gas, and Power fell 5%, while Adani Ports and Special Economic Zone fell almost 9%. “We consider this as support of our findings,” Hindenburg creator Nathan Anderson tweeted after the MSCI announcement. Hindenburg has accused Adani of pumping money into its stocks using offshore tax havens to increase their value. Adani has consistently disputed the charges and called the US investment group “maliciously mischievous.” The businessman is close to Indian Prime Minister Narendra Modi, who opposition legislators accuse of aiding Adani’s quick climb to Asia’s richest man until last month. The stock market crash dropped him from third to 17th on Forbes’ real-time billionaires list. Last week, Adani said his company’s “fundamentals are quite solid”. A source told Reuters this week that the Securities and Exchange Board of India is probing the market meltdown.
Moody’s ratings service cautioned that share price reductions might hurt the group’s capacity to raise cash, while India’s central bank is monitoring lenders’ holdings. JPMorgan announced Tuesday that Adani Group firms are eligible for its prominent bond indexes. Following the Hindenburg investigation, Adani firms filed that they were exploring an independent review of legal compliance, related party transactions, and internal controls.
