Explainer: Mystery behind slump in India’s Adani Group company shares

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CHENNAI (Reuters) – Shares of companies controlled by Indian billionaire Gautam Adani are set to record their biggest weekly losses ever. The six stocks cumulatively lost nearly 2 trillion Indian rupees ($26.98 billion) of value in four days through Thursday.


Indian newspaper Economic Times reported on Monday the accounts of three Mauritius-based funds, which are among the top foreign investors in Adani group companies, had been frozen by the National Securities Depository Ltd (NSDL).

The NSDL website showed accounts held by the three funds frozen as of May 31, among thousands of others, without citing a reason, according to a review by Reuters. The exact date of the freeze is unknown and the accounts remained frozen on Friday, according to the website.


The Adani Group firms, in identical statements issued to stock exchanges, rejected media reports, including in the Economic Times, as “blatantly erroneous.”

The companies, which are in the businesses of operating airports and ports, power generation and transmission, coal and gas trading, said the accounts in which the funds hold Adani shares were not frozen.

NSDL and India’s securities regulator SEBI did not respond to requests for comment from Reuters.

But a senior NSDL official, who declined to be identified, told Reuters on Monday the funds have multiple accounts and that the Adani shares were held in other accounts that were not frozen, adding that freeze was “not new”.

The shares of the Adani companies however have continued to fall.


The three foreign funds – Albula Investment Fund, Cresta Fund and APMS Investment Fund – are all registered at the same address, according to the Mauritius financial regulator.

The funds cumulatively control 2.7% of all shares in the Adani Group companies as on June 11, calculations based on an e-mail sent by Adani executive to NSDL and reviewed by Reuters showed.

A spokesman for the Adani Group did not immediately respond to questions on the shareholdings.

Two other Mauritius-based funds that are also investors in Adani companies – LTS Investment Fund and Asia Investment Corp – are also registered at the same address.

Reuters was unable to find a website for all five funds, and calls to the phone numbers provided to Mauritius regulators went unanswered.

The five funds deployed 94.4%-97.9% of their total capital in Adani companies’ shares, data by Indian stocks analysis firm Trendlyne showed.

Reuters could not independently verify Trendlyne data.

Four of the six Adani stocks have a public shareholding of about 25% – the minimum level mandated by regulators for companies listed on Indian exchanges.

High promoter stakes in Adani group companies https://graphics.reuters.com/ADANI-STOCKS/CRASH/xklvyarwovg/chart.png

Indian stock exchange data shows most shares of Adani Group companies are held by trusts controlled by Adani. Foreign portfolio investors are the next largest shareholders, while retail and domestic investors typically control about 5%.


After falling 0.4-8.5% on Monday, the day of the Economic Times report, Adani group stocks fell between 7.7%-23% in the first four days this week, wiping out nearly a quarter of the gains in the year preceding this week.

The decline saw the firms’ cumulative market capitalisation decline by over a sixth.

“I don’t think the market is convinced with the quality of the clarification from the Adani group,” Jimeet Modi, founder of Mumbai-based Samco Securities, told Reuters.

($1 = 74.0375 Indian rupees)