There were reports of some of the Adani Group stocks freely trading in public markets. Moreover, the specified shares dragged down the group’s overall shares. Now Morgan Stanley Capital International (MSCI) is looking into the matter.
More selling is likely to occur if the index provider decides to lower its assessment of Adani’s freely tradable shares. It can even remove them from its indexes. In a further indication of the Adani group’s wider fallout from Hindenburg Research’s critical report last month, French energy giant TotalEnergies SE announced a multi-billion dollar plan to create green hydrogen with the company on hold until audits.
Following the recent downturn in value, Norway’s $1.4T sovereign wealth fund said it had sold its last holdings in the Adani Group firms. Even before Hindenburg’s report broke out, the Oslo-based hedge fund was cutting its exposure to the Indian corporation.
Adani Group constituents’ liquidity diminishes as investors sell
Hindenburg had made a major claim that many of the biggest public, or non-insider, holders of Adani stocks were offshore shell companies and funds linked to the Adani Group. MSCI’s review darts market attention back to this important allegation. When the index provider releases its February index review, it said it will implement and announce any resulting adjustments to the so-called free float and group stock market capitalization.
In the meantime, following the rout sparked by Hindenburg’s allegations, several banks were said to have refused to refinance some of the conglomerate’s debt. According to Bloomberg, that has prompted the organization to seek a $500M prepayment on its upcoming bridge loan.
The troubled organization is also selling coal supplies at a discount. This indicates that it may be trying to dispose of its holdings quickly. Evidently, its liquidity position comes under increased monitoring.
Concerns over the group’s access to funding are likely to keep investors on edge as shares continue to fall. The Adani turmoil has spread beyond the financial markets. The linkages between Prime Minister Narendra Modi and Gautam Adani are the primary highlights of India’s main opposition party. The billionaire’s meteoric rise that is directly proportional to the leader’s ascent to power also sparks concerns.