New Delhi
CNN
—
Indian billionaire Gautam Adani suddenly tried to reassure investors on Thursday. abandoned $2.5 billion stake sale of his flagship company.
“For me, the interests of investors come first and everything is secondary,” said the 60-year-old businessman. Address of recorded video“Once markets stabilize, we will review our capital markets strategy.”
This was the first time the tycoon spoke out about the stock market mayhem that wiped billions of dollars out of his logistics and energy business empire.
The week-long crash in Adani Group’s stock price began when an American short seller accused the conglomerate of fraud. The group of seven publicly traded companies lost more than $90 billion in market value in a week after Hindenburg Research published its report.
Foreign banks began to scrutinize conglomerates closely.according to bloomberg, Credit Suisse has stopped accepting bonds of Adani companies as collateral for margin loans to private banking customers. The Swiss lender declined to comment on his CNN request for confirmation.
Despite the turmoil, the group’s flagship Adani Enterprises was able to issue new shares worth $2.5 billion on Tuesday. The capital raising exercise was touted as India’s largest public offering by a listed company. After a lukewarm start, the offer was fully subscribed.
But the next day Adani abandoned the deal. The stock has been trading well below the offer price since last week, meaning investors in the funding were looking at immediate losses.
“Therefore, in order to insulate investors from potential losses, we have withdrawn,” Adani said in the video. “This decision will not affect our existing business or future plans. We will continue to focus on the timely execution and delivery of projects.”
Adani added that his group’s fundamentals are “strong” and it has an “impeccable track record of paying its debts.”
In an investigation published January 24, Hindenburg Research accused Adani Group of “decades of brazen stock manipulation and accounting fraud schemes.”
The research firm also questioned the Adani companies’ “very high valuations” and said their “high debt” put the entire group on a “shaky financial base.”
Adani Group was quick to denounce the report as “unfounded” and “malicious”, but the video address was the first time the founders spoke about the crisis.
But it wasn’t enough to calm the market. Adani Enterprises shares fell nearly 9% in Mumbai, while shares in his other companies plummeted from his 5% to his 10%.
Indian market regulators have yet to comment on last week’s events. But Reuters reported The Securities and Exchange Board of India (SEBI) cited a source with direct knowledge of the matter on Wednesday as it was investigating the drop in share prices and possible fraud in Tuesday’s stock sale.
The end of Wednesday’s stock sale was a major setback for one of India’s most prominent businessmen. Just a week before him, Adani’s vast group of assets surpassed his $200 billion, making him Asia’s richest man. At some point last year, he overtook Jeff Bezos to become his second richest person in the world.
Adani lost his position as Asia’s richest person on Wednesday, according to the Bloomberg Billionaires Index. According to the index, his net worth was $72.1 billion. Mukesh Ambani with a fortune of $81 billion.
CNN’s Mark Thompson contributed to this report.
