UAE Royals Invest $400 Million In Adani Group Through Share Sale

In order to restore trust in the conglomerate, whose value dropped by nearly $70 billion after a small New York short seller released a damning report, billionaire Gautam Adani's troubled group clung to a $400 million (Rs 3,260 crore) investment by Abu Dhabi's International Holding Co. in its flagship firm's share sale.

Gautam Adani, 60, passed Mukesh Ambani, a rival, in April of last year, and their difference is now barely $4 billion. Before Hindenburg Research's study on January 24, which expressed worry about Adani's debt levels and claimed stock manipulation, accounting fraud, and use of tax havens, was published, he was the third-richest man in the world.

His group late on Sunday night produced a 413-page response to the Hindenburg investigation in an effort to increase faith in the corporate empire. However, it did not go over well; on Monday, important dollar bonds reached new lows and the stock prices of most group companies kept falling.

According to the US short seller, who disputed assertions that its report on Adani Group's misdeeds was a "calculated attack" on India, a "fraud" cannot be concealed by nationalism or a bloated response that left out significant allegations.

On January 24, Hindenburg published the research, the same day that investors could purchase shares in Adani Enterprise Ltd.'s follow-on share offering worth 20,000 crores. According to statistics accessible on BSE, only 3% of the shares on offer had been subscribed as of Monday evening, despite the fact that anchor investors had invested about 6,000 crores in the FPO on that day.

The offer expires on January 31 and the retail investor segment, which makes up the majority of the FPO, has only received about 4% of the total subscriptions.

Despite the drop in share value, IHC stated that it is still confident in the fundamentals of Adani Enterprises and will contribute about $400 million to the follow-on share sale. We see a big opportunity for expansion from a long-term viewpoint and added value to our shareholders, says the company's CEO Syed Basar Shueb.

Sheikh Tahnoon Bin Zayed Al Nahyan, the president's brother and national security adviser for the UAE, is in charge of IHC.

The group's investments are secure, according to a separate statement from Life Insurance Corporation (LIC). "We currently possess 36,474.78 crores worth of equity and debt in the Adani group firms. As of December 31, 2022, this was 35,917.31 crore. These shares of the group firms were purchased for a total of 30,127 crores over the course of several years, and their market worth was 56,142 crore on January 27, 2023 "It read.

However, Punjab National Bank (PNB), which has exposure to Adani Group firms of around 7,000 crores, stated that it is closely monitoring the evolving scenario.

The Adani Group's 413-page detailed statement, which was released late on Sunday, was addressed by Hindenburg earlier in the day. Hindenburg claimed that the statement ignored 62 of its 88 specific questions and confused India's success with the company's "meteoric rise" and the wealth of Asia's richest man.

Adani Group referred to Hindenburg as the "Madoffs of Manhattan" in a statement released on Sunday evening and claimed that its report was "not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity, and quality of Indian institutions, as well as the growth story and ambition of India."

IHC's investment comes at a time when Mr. Adani is working to restore trust in his company following allegations from Hindenburg that the conglomerate engaged in accounting fraud, market manipulation, and the management of a network of controlled offshore shell companies in tax havens. The short seller later said that the Adani Group's 413-page answer, which overlooked all of its major accusations, was "obscured by nationalism."

Despite the Adani Group's denial of the accusations, the story has renewed investor worries about the conglomerate's corporate governance. Additionally, it poses a threat to erode public confidence in India, which until recently was one of Wall Street's top investment destinations.

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