Gautam Adani fails to reassure markets

Shares in companies tied to the Indian tycoon Gautam Adani fell again today, after his flagship company unexpectedly pulled a $2.5 billion stock offering despite securing support from investors. And comments by the billionaire today defending his business empire failed to stop the financial bleeding.

Adani companies have now shed some $108 billion over the past eight days, with the flagship Adani Enterprises falling nearly 29 percent today alone. That carnage began after the American short seller Hindenburg Research accused the Adani Group of market manipulation and fraud. Among Hindenburg’s central accusations is that the conglomerate inflated its companies’ share prices through a maze of offshore tax shelters.

Mr. Adani himself, until last week ranked as Asia’s wealthiest man, has personally lost an estimated $48 billion in wealth in the past month.

Investors may be spooked by the pulling of Adani Enterprises’ offering. The sale, which ended on Tuesday and would have set a fund-raising record for an Indian company, was meant to lower the company’s debt burden while drawing new top-flight investors, especially from abroad.

Adani Enterprises has described withdrawing the offering as the “morally correct” thing to do given its volatile stock price: By this morning, its shares traded at just 1,565.30 rupees ($19), around half the offering’s floor price. And in a four-minute video address posted online today before Indian markets opened, Mr. Adani said pulling the deal would insulate the company’s investors from steep losses: “The interest of my investors is paramount.”

But scrutiny of the Adani empire is growing. India’s Securities and Exchange Board is reportedly looking into Adani Enterprises’ stock drop and potential issues with the now-withdrawn offering, according to Reuters.

And investors are looking into both the Adani Group’s corporate governance — given the tight control that Mr. Adani and his family exert — and the conglomerate’s debt load, including over $2 billion in debt payments that are owed this year and more than $700 million due this quarter alone.

“The biggest risk is that the matter escalates such that onshore banks and investors lose confidence in the group, and that it impacts their access to financing,” Leonard Law, a credit analyst at Lucror Analytics in Singapore, told DealBook. He added that could most affect highly indebted parts of the Adani universe, including Adani Green Energy, whose shares have fallen 10 percent this morning, and have halved over the past three weeks.