Investing

Indian Banks Exposed to 40% of Adani Group's $24.5B Debt: Report

Tim Fries

Published: February 2, 2023 10:13 pm

According to estimates by CLSA, Indian banks were exposed to around 40% of the $24.53 billion debt held by the troubled conglomerate Adani Group, Reuters reported Thursday. Adani’s shares are down over 26% today after the conglomerate called off its share offering, taking its market losses to more than $100 billion after a scathing report released by Hindenburg Research accusing the group of corporate fraud.

Adani Group’s Market Losses Surge Beyond $100B

Banks in India were exposed to roughly 40% of Adani Group’s $24.5 billion debt in the fiscal year that ended in March 2022, according to Reuters, citing CLSA estimates. The Reserve Bank of India (RBI) has asked the local banks to report their exposure to the embattled conglomerate in the wake of its stock offering debacle.

Adani Group’s plunged more than 26% Thursday after the company scrapped its long-awaited $2.5 billion share offering amid regulatory concerns. The move took Adani’s market losses to over $100 billion, intensifying concerns over a potential systemic impact.

The conglomerate dropped its share sale late on Wednesday following a stocks rout triggered by short-seller Hindenburg Research. The stock offering was called off despite being fully subscribed just a day earlier.

Adani’s Woes Continue to Mount Since Hindenburg Report

On Jan. 24, investment research firm Hindenburg Research published a report on Adani Group, calling the conglomerate the “largest con in corporate history.” Among numerous allegations against Adani, Hindenburg said the conglomerate used offshore companies and funds in the Caribbean Islands and Mauritius to hold equities in Adani-listed businesses without disclosure and over-value stocks of its top companies in the infrastructure sector.

Further, several major Adani subsidies hold “substantial debt” that places the entire conglomerate at risk, Hindenburg alleges in the report. More specifically, the research firm says Adani’s debt has swollen to $27 billion as of March 2022, marking a year-over-year increase of more than 40%.

Hindenburg’s report triggered a massive sell-off in Adani Group stocks, which have lost $48 billion in value over just three days. Adani published a 413-page document in response to Hindenburg’s allegations. Still, the move did little to prevent the sell-off of the conglomerate founded by Gautam Adani, one of the wealthiest persons in the world. Gautam Adani reportedly lost almost $28 billion in personal wealth in the wake of recent developments.

This article originally appeared on The Tokenist