(Bloomberg) — The stock rout in Gautam Adani’s beleaguered empire intensified to more than $100 billion, as the fallout from a short-seller’s fraud allegations leads the Indian billionaire to pull a record equity offering and announce a review of his capital market strategy.
Most Read from Bloomberg
Adani Enterprises Ltd. slumped more than 15% before paring some losses. The stock plunged 28% on Wednesday, prompting the company to abandoned a $2.4 billion follow-on share sale to insulate investors in the offering from potential losses. Most of the other nine stocks in the group also fell.
The meltdown has wiped out $104 billion in market value for the group’s stocks since US short seller Hindenburg Research made fraud allegations against the conglomerate. The group’s bonds also plunged to distressed levels, with banks either demanding more collateral for loans or scrutinizing the firms’ debt value to lend against.
The question now is what Adani will do to prevent the turmoil from getting out of control, especially after the setback with the stock offering, which would have been India’s largest, and further raise his global profile. The risk is also that more financial institutions start to scrutinize their exposure to a business empire that sprawls from ports to green energy.
Read more: Adani Abruptly Abandons $2.4 Billion Stock Sale as Crisis Mounts
“The biggest risk is if Adani Group faces a severe deterioration in access to financing, particularly at its highly leveraged entities,” Leonard Law, a senior credit analyst at Lucror Analytics, wrote in a note. “This is as a liquidity crunch at any one of the entities may have a ripple effect on financing access for the wider group. That said, the group can likely continue to raise funds from onshore banks and bonds for now.”
Citigroup Inc.’s wealth arm has also joined Credit Suisse Group AG in stopping the acceptance of securities of Adani’s group of firms as collateral for margin loans as banks ramp up scrutiny of the Indian tycoon’s finances.
Hindenburg Research last week…