Abu Dhabi’s IHC to invest $400mn in Adani share sale
Abu Dhabi’s International Holding Company plans to invest $400 million in a share sale by Indian billionaire Gautam Adani’s flagship group, a boost to a business empire rocked in the past week by allegations of fraud.
IHC, a conglomerate with businesses spanning healthcare, energy and food, said on Monday it would buy 16 percent of the shares offered by Adani Enterprises in a sale designed to broaden the Indian group’s investor base.
The success of the $2.4 billion share sale is threatened by allegations from US short-seller Hindenburg that Adani engaged in “reckless stock manipulation and accounting fraud” over decades. Adani denied the allegations made by Hindenburg just 48 hours before the Indian group began the share sale last Friday.
The decision by IHC, a once obscure collection of businesses that is now the largest listed group on the Abu Dhabi Stock Exchange after a meteoric rise in its share price, strengthens its existing ties with Adani. IHC invested $2 billion in Adani last April.
“Our interest in Adani Group is driven by our confidence and belief in the fundamentals of Adani Enterprises Ltd,” IHC CEO Syed Basar Shueb said in a statement.
The news came after the close of the Indian stock market, where further declines for several of Adani’s companies took the total of the billionaire’s empire to more than $68 billion since Hindenburg first alleged fraud.
London-listed Jupiter Asset Management, BNP Paribas, Société Générale and Goldman Sachs are among the institutions allocated shares in the sale.
Indian retail investors can buy shares until tomorrow, when the sale is due to be completed. Rajat Sharma, founder of Delhi-based retail brokerage Sana Securities, said he had seen little interest in the sale.
“We had no demand. Usually we see some demand but there is nothing so far,” said Sharma. “Right now it’s ‘nothing’ numbers.”
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Adani rejected reports at the weekend that it was lowering the price of the offer and promised that it would be completed on Tuesday.
The billionaire’s insistence came as Indian opposition MPs demanded that the country’s market regulator and stock exchange address Hindenburg’s allegations.
Parties including the Congress Party, India’s largest opposition group, have written to the Securities and Exchange Board of India and the National Stock Exchange of India asking about the status of an ongoing Sebi probe of companies linked to Adani, which the country says s ministry of finance is underway. in 2021.
At the time, Indian authorities said they were investigating some Adani companies over their compliance with Sebi regulations. At the time, Adani said it was fully compliant with applicable Sebi regulations.
“If the investigation is not complete, why is it taking so long?” MP Mahua Moitra, who represents the All India Trinamool Congress, a smaller opposition party, asked in the letter to Sebi’s chairman Madhabi Buch and seen by the Financial Times. “When will it be finished?”
Sebi and the stock exchange did not respond to requests for comment on Monday.
In a day of volatile trading, shares in Adani Enterprises closed nearly 5 percent higher at Rs2,892 ($35.47) in Mumbai, but remained below Rs3,112, the lower end of the price range set by the group for the share sale . Much of the demand for stock sales in India usually comes late in the supply period, often on the last day.
As Adani banks on Indian investors buying tomorrow, Jupiter Fund Management is one of just a handful of London-based investors participating in the sale. The asset manager is buying the shares through its India Fund, which is run by Avinash Vazirani and Colin Croft and previously held a stake in Adani Enterprises. Jupiter declined to comment.
While shares in Adani Enterprises clawed back from the nearly 20 percent drop they had on Friday, Adani Green Energy and Adani Total Gas both fell the maximum 20 percent allowed by the Bombay Stock Exchange and the National Stock Exchange of India. Adani Transmission fell 15 percent. Multiple bonds issued by Adani Group entities also declined.
The day of turmoil came after the Adani group on Sunday issued a 54-page rebuttal to Hindenburg’s accusations, describing them as “not simply an unwarranted attack on any particular company, but a calculated attack on India”. .
Additional reporting by Emma Dunkley in London
