Wed 01 February 2023:
Credit Suisse Group AG has stopped accepting Gautam Adani’s group of companies bonds as collateral for margin loans to its private banking clients, indicating that the Indian tycoon’s finances are being scrutinized following allegations of fraud by short seller Hindenburg Research.
Adani Group shares were in freefall on Wednesday, when Union Budget 2023 was released, after global brokerage firm Credit Suisse assigned zero lending value to its bond. The global firm’s scrutiny of Adani Group bonds comes a day after Adani Enterprises’ follow-on public offer sailed through successfully due to the support from non-institutional investors.
ADANI TAKES CONTROL OF NDTV, BUYS PROMOTERS AT 17% PREMIUM TO OPEN OFFER PRICE
As of 3:00 PM on Wednesday, Adani Enterprises crashed 30 per cent, Adani Ports dropped 25 per cent, Ambuja Cements plunged 19 per cent, Adani Total Gas dropped 20 per cent, Adani Wilmar was down 5 per cent, ACC slumped 6.5 per cent and NDTV fell 5 per cent.
Credit Suisse Group stopped accepting bonds of Adani group of companies as collateral for margin loans to its private banking clients, a sign that scrutiny of the Indian tycoon’s finances is growing after allegations of fraud by short seller Hindenburg Research, news agency Bloomberg reported.
Following the Hindenburg report that came out on 24 January, said in its report that Adani Group had used undisclosed related-party transactions and earnings manipulation to “maintain the appearance of financial health and solvency” of its listed business units.
Adani Group dismissed the report as baseless and that it was the victim of a “maliciously mischievous” reputational attack by Hindenburg.
Legal chief Jatin Jalundhwala said Adani was exploring considering taking legal action against the New York-based research advisory in US and Indian courts.
Hindenburg responded that Adani had ducked the issues its research had raised and instead resorted to “bluster and threats”.
“If Adani is serious, it should also file suit in the US,” the firm said in a statement. “We have a long list of documents we would demand in a legal discovery process.”
HINDENBURG RESEARCH: AMBANI REPLACES ADANI AS THE RICHEST INDIAN
Adani, with a net worth of $96.6bn, is considered a close supporter of Prime Minister Narendra Modi. India’s main opposition Congress party has often accused Adani, and other billionaires, of getting favourable policy treatment from Modi’s administration, allegations the billionaire has denied.
The Adani Group was established in 1988, beginning with commodities trading. The conglomerate’s business interests now extend from ports and airports to mining and renewable power.
The report said a pattern of “government leniency towards the group” stretching back decades had left investors, journalists, citizens and politicians unwilling to challenge the group’s conduct “for fear of reprisal”.
SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES
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