The Adani Group of Companies founder and chairperson Gautam Adani saw his wealth dwindle by up to $10 billion within an hour of the opening bell on Dalal Street on Monday, following reports that National Securities Depository Ltd. (NSDL) had frozen the accounts of three foreign portfolio investors who held large stakes in the group’s companies.
An account freeze prevents funds from selling current securities or purchasing new ones. Adani firms’ shares fell by up to 25% in trading after the Economic Times reported that the NSDL suspended the accounts of three foreign portfolio investors who hold a significant portion of the group’s non-promoter shares.
The three frozen funds, Albula Investment Fund, Cresta Fund, and APMS Investment Fund, collectively control approximately ₹43,500 crores in shares across four of the group’s firms. According to the report, NSDL most likely stopped the accounts of these registered FPIs on May 31.
The Adani Group called the claim “blatantly erroneous” and stated that the NSDL had certified that the investors’ accounts had not been suspended. “We regret to mention that these reports are blatantly erroneous and are done to deliberately mislead the investing community. This is causing irreparable loss of economic value to investors at large and reputation of the group,” said the organisation in a regulatory filing.
“Given the seriousness of the article and its consequential adverse impact on minority investors, we requested Registrar and Transfer Agent, with respect to the status of the Demat account of the aforesaid funds and have their written confirmation that the Demat account in which the aforesaid funds hold the shares of the company are not frozen,” reassured the group.
The NSDL and India’s securities regulator SEBI have not replied to queries for comment. However, a senior NSDL official told Reuters that the depository had frozen accounts of funds owning certain other assets rather than those owning Adani firm shares, and that the restriction was “not new”. “Foreign portfolio investors generally have one account. But in certain circumstances, they can have multiple accounts. In this case, the funds hold at least more than one account,” said the official, speaking on condition of anonymity as he was not authorised to talk publicly about the matter.
The stocks mounted a rally however, thanks to some late bargain shopping, helping keep the group’s existing worth at just under $5 billion. According to the Bloomberg Billionaires Index, Gautam Adani’s personal worth was $77 billion as of last Friday.
Adani Group ended the day with a $7.3 billion value depreciation as its market capitalisation plummeted by up to $15 billion when the equities hit their day’s low shortly after the Opening Bell.
Before Monday’s selloff, the group’s equities enjoyed a great year, supported by the group’s focus on renewable and annuity-type business models, as well as the entry of major global corporations and investors in various industries of the Gujarat-based conglomerate.
The rise in the value of the group’s equities, which are traded on the National Stock Exchange and the Bombay Stock Exchange, has made Gautam Adani the world’s fastest wealth creator so far in 2022. Until Friday, Adani had gained $43 billion to his fortunes as the group’s market value increased rapidly.
Adani Group’s market value increased from slightly more than ₹1 lakh crore at the bottom of the crisis in March 2020 to approximately ₹10 lakh crores as of last Thursday, indicating the group’s parabolic surge in fortunes. Gautam Adani has risen to be the second richest person in Asia as a result of the recent jump in the group’s shares. He is the world’s 14th wealthiest person.
A large portion of that surge has been aided by limited liquidity in the stocks, which has lately led to charges of stock manipulation. The promoters own roughly 75 percent of the shares across the bulk of the group’s listed firms, while six to seven international portfolio investors own the majority of the free-floating shares. This leaves a relatively small number of shares for day-to-day traders or retail investors, creating artificial demand for the group’s equities, especially since their first success in mid-2020 attracted cash-rich retail investors.
Adani Total Gas shares were up 335 percent in 2021 up till June 11. Adani Transmission had increased by 266 percent, Adani Enterprises by 235 percent and Adani Power by 200 percent. These were followed by a rise in Adani Ports by 74 percent and Adani Green by 17 percent. On Monday, shares of Adani Enterprises, Adani Power, Adani Ports and Special Economic Zone, Adani Total Gas, and Adani Transmission closed at 5-9 percent below the last closing price on the NSE. Adani Green rebounded to close in the green.