Shares of companies linked to Indian tycoon Gautam Adani, one of Asia’s richest men, fell sharply after the country’s largest securities custodian froze the accounts of foreign funds with valued holdings. of several billion dollars.
Four of the six listed companies in the Adani Group fell from the maximum amount allowed by foreign exchange rules on Monday, while billionaire Adani Ports & Special Economic Zone’s flagship plunged 19%.
The drop follows the announcement by India’s National Securities Depository that it has frozen the accounts of Mauritian funds Albula Investment Fund, Cresta Fund and APMS Investment Fund. The Indian newspaper The Economic Times reported that the move, which prevents funds from trading shares, was due to a lack of documentation on the beneficial ownership of the entities.
Adani’s net wealth had jumped from $ 44 billion to $ 78 billion this year on the basis of a rally in the stock prices of companies linked to his apple energy conglomerate. This had propelled him to the post of The second richest man in Asia, sweeping past Chinese tech titans such as Alibaba’s Jack Ma and ByteDance founder Zhang Yiming and within easy reach of the chair of Reliance Industries Mukesh Ambani.
The fall in Adani-related stocks on Monday wiped out more than $ 6 billion from the tycoon’s net worth, according to Bloomberg figures, putting it at just under $ 71 billion.
Over the past year, shares of Adani Transmission have increased by 640%, those of Adani Enterprises by 860% and those of Adani Total Gas by 1,030%.
But analysts have expressed concerns about stocks held by a small handful of foreign funds and having a small public float.
Bloomberg Intelligence analysts wrote in a note last week that the rally in shares of Adani Total Gas, Adani Enterprises and Adani Transmission appeared “prolonged.”
“Among the biggest foreign investors are a few Mauritian funds holding more than 95 percent of the assets of these companies,” analysts said. “Such concentrated positions, coupled with negligible onshore ownership, create asymmetric risk-reward, as large investors ostensibly avoid Adani.”
The Adani group declined to comment. NSD did not immediately respond to a request for comment.
The Indian stock market recently hit records even as the economy struggles to recover from a severe second wave of coronavirus infections.
Index provider MSCI added three Adani stocks to its Indian index in May.
Adani has attracted international partners in its drive to become one of the world’s largest renewable energy companies. Total in January bought a 20 percent stake in Adani Green Energy, which last month acquired the Indian energy unit of the Japanese technology group SoftBank.
The infrastructure mogul has been criticized for his controversy Carmichael Coal Mine in Australia, which has been the subject of global environmental protests.
