Shares of some companies controlled by billionaire Gautam Adani plummeted after a report said accounts belonging to three Mauritius-based funds that own the group's stocks had been frozen.
The National Securities Depository Ltd. froze the accounts of Albula Investment Fund, Cresta Fund, and APMS Investment fund effective May 31 according to their website following an insufficient disclosure of ownership information, as reported by The Economic Times newspaper on Monday citing people it didn't identify.
When the Adani Group funds were frozen in Mauritius, it was discovered that they had more than $6 billion of investments tied up.
The report found that the funds registered at the same address in Port Louis, own more than 435 billion rupees ($6 billion) from four Adani Group firms. These frozen accounts won't be able to sell or buy new securities as a result of this oversight.
The Adani Group is feeling the strain of an economic slowdown in India. Shares for their flagship company, which manages and operates ports, power plants, gas fields, and other assets across the Indian subcontinent fell by as much as 25%. In addition to plummeting prices for coal imports into a country with few domestic resources led investors away from mining operations while increasing investment risk due to higher interest rates on corporate debt.
An Adani spokesperson declined to comment when reached out about this situation but one thing's clear: we're going through tough times here at home!
Authorities must be “vigilant” on the sharp price moves in Adani group stocks, said Shriram Subramanian, founder of proxy advisory firm InGovern Research Services Pvt. “Sebi should also investigate the concentration of holdings by select funds without disclosure of beneficial owners,” he said.
Gautam Adani has had an incredible year and his wealth is recently estimated at $40 billion. The share prices of the Adani Group companies have risen sharply this year, making him Asia’s second-richest person after Jack Ma. However with most shares held in overseas funds, there are some concerns about what might happen if these investments were to change hands or securities markets started contracting again.
The Indian-based Adani group is doing phenomenally well this year, with their stocks skyrocketing. The company's power arm has seen a 183% increase in its price so far this year. However today they saw a 20% drop due to the lack of information from the company that would have driven up speculation or create demand for shares--which may be an indication of some internal strife within the organization and we'll watch it closely as more news surfaces about them!
This is a warning. The Bloomberg Intelligence analysts want you to know that there are signs of instability in the stock market, specifically with stocks for Adani Total Gas and its subsidiaries like Adani Enterprises and Adani Transmission. They base this observation on technical indicators analysis they conducted which suggests these companies may be overvalued or even riskier investments than before because their output tone has gotten too stretched out from here to infinity (or at least until the next earnings release).
The group’s stocks, especially those belonging to multinational conglomerate company ADANI Group such as Anandi Total Gas Ltd., itself a subsidiary of Indian energy giant ADANI Enterprises Limited; ANANDI TRANSMISSION LIMITED - an indirect holding company affiliated with power transmission business.
“Among the biggest foreign investors are a few Mauritius-based funds holding over 95% of assets in these companies,” the analysts wrote. “Such concentrated positions, along with negligible onshore ownership, create asymmetric risk-reward as large investors conspicuously avoid Adani.”
For more details and updates visit The Market Activity.