Adani promoters prepay $1.1 bn to release pledged shares

Adani Group promoters have prepaid $1.1 billion, or about Rs 9,000, to release pledged shares across group companies. This will help release about 168 million shares in Adani Ports and Special Economic Zone Ltd. 

The part repayment is part of the ports-to-power conglomerate’s efforts to allay investor fears and stem a stock rout that’s in its third week.
“In light of recent market volatility and in continuation of the promoters’ commitment to reduce the overall promoter leverage backed by Adani listed company shares, we are pleased to inform that promoters have paid the amounts to prepay $1,114 million ahead of its maturity of September 2024. With the repayment of such amount, the following Adani listed company shares shall be released in due course –
  • Adani Ports & Special Economic Zone Ltd: 168.27 million shares, representing 12% of the promoters’ holding
  • Adani Green Energy Limited: 27.56 million shares, representing 3 per cent of promoters’ holding
  • Adani Transmission Limited: 11.77 million shares, representing 1.4 per cent of promoters’ holding,” the company stated in a website release.
This is in continuation of promoters’ assurance to prepay all share backed financing, the release added.
Adani Ports extended gains to 9.3 per cent after the announcement but Adani Transmission and Adani Green were down 10 per cent and 5 per cent, respectively, on the day.
Adani is seeking to restore confidence in his sprawling conglomerate’s financial health after a scathing short seller attack in late-January wiped out $118 billion of the group’s market value and forced the flagship to scrap a share sale. US-based Hindenburg Research had accused it of accounting fraud, stock price manipulation and pledging their inflated shares for loans — allegations Adani has repeatedly denied.
Last week, Bloomberg reported citing people familiar with the discussion that the Adani Group was in talks with creditors to prepay some loans backed by pledged shares. The key priority for the prepayment is to remove any concern about margin calls, the report said.
Opposition MPs, meanwhile, kicked off protests in Parliament over the crisis at Adani Group, whose seven listed firms saw another sell-off following the vicious attack by the Hindenburg Research group that drove their market loss to $112bn in less than two weeks.
Members of the Congress party on Monday triggered protested outside several offices of state-owned insurer Life Insurance Corporation (LIC) and the State Bank of India (SBI), claiming the two state-run entities have exposure to Adani Group companies.
The Adani Group, one of India’s top conglomerates, has rejected the criticism and denied wrongdoing in detailed rebuttals, but that has failed to arrest the unabated fall in its shares.
In the brutal fallout of the Hindenburg report, Adani Group flagship company Adani Enterprises Ltd was forced to abandon a $2.5bn share sale last week, and Group chairman Gautam Adani lost his crown as Asia’s richest person and slipped down the global rankings of the wealthy.
Gautam Adani and India’s Prime Minister Narendra Modi are from the same state. Adani has denied allegations by Modi’s opponents that he had benefitted from their close ties, and Modi’s government has denied allegations of favouring Adani.
The stock market rout triggered a series of credit ratings warnings on Friday with Moody’s saying the Group may struggle to raise capital, and S&P cutting its outlook on two Group companies.
Even attempts by regulators and the government to calm spooked investors do not appear to be working.
The Reserve Bank of India said on Friday the country’s banking system remains resilient and stable. The next day, India’s market regulator said the country’s financial markets remain stable and continue to function in a transparent and efficient manner.
SBI said on Friday it was not concerned about the exposure to the Adani Group, but further financing to its projects would be “evaluated on its own merit”.
LIC has a 4.23 per cent equity stake in the flagship Adani Enterprises, while its other exposures include a 9.14 per cent stake in Adani Ports and Special Economic Zone, according to a Reuters report.