Exclusive: Indian market regulator examining Adani share rout, source says

MUMBAI, Feb 1 (Reuters) – India’s market regulator is examining a current crash in shares of Adani Group and looking out into any potential irregularities in a share sale by its flagship firm, a source with direct data of the matter informed Reuters on Wednesday.

The Securities and Exchange Board of India’s (SEBI) examination comes on a day when Adani Group shares plunged, extending losses in seven listed corporations to $86 billion within the wake of a U.S. short-seller report.

Spokespeople for Adani Group and SEBI didn’t instantly reply to a request for remark.

SEBI is enterprise a full-scale examination of the autumn in shares, the source mentioned, declining to be recognized because the matter is confidential.

The share plunge was sparked by a report by Hindenburg Research final week which alleged improper use by the Adani Group of offshore tax havens and inventory manipulation. It additionally raised issues about excessive debt and the valuations of the seven listed Adani corporations.

The group has denied the allegations, saying the short-seller’s narrative of inventory manipulation has “no foundation” and stems from an ignorance of Indian regulation. It has all the time made the mandatory regulatory disclosures, it added.

The source informed Reuters the Indian market regulator can be trying into any potential value manipulation of Adani group shares, in addition to examining potential irregularities within the $2.5 billion share sale of the flagship agency Adani Enterprises (ADEL.NS), which concluded on Tuesday.

While the share providing’s e-book constructing course of was coated solely 3% on Monday, it was absolutely subscribed on Tuesday. As overseas institutional buyers and company funds flooded in, the group managed to safe investments although Adani Enterprises traded beneath the share sale’s supply value.

On Wednesday, a day after the share sale closed, Adani Enterprises (ADEL.NS) plunged 28%, bringing its losses for the reason that Hindenburg report back to greater than $18 billion. Adani Ports and Special Economic Zone (APSE.NS) dropped 19%. Both shares marked their worst day ever.

“All key departments – company finance, surveillance division on the regulator are examining the share value fall. Exchanges are additionally sending a report,” mentioned a second source acquainted with the matter.

The first source added that SEBI was additionally trying into allegations of dealings between Adani Group and associated entities that have been cited within the Hindenburg report.

Adani mentioned in its rebuttal to Hindenburg’s report that: “All transactions entered into by us with entities who qualify as ‘associated events’ below Indian legal guidelines and accounting requirements have been duly disclosed by us.”

Reporting by Jayshree P. Upadhyay
Editing by Ira Dugal and Mark Potter

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