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Adani Crisis In India Erupted Into Street Protests, As Company’s Losses Exceed $110 Billion

Adani Crisis In India Erupted Into Street Protests, As Company’s Losses Exceed $110 Billion
The crisis engulfing the Adani Group grew worse on Monday, with hundreds of members of India's opposition parties taking to the streets to demand an investigation into allegations made against the conglomerate by a U.S. short-seller, which triggered the market rout.
Shares in billionaire Gautam Adani's companies have been in free fall since a critical report by Hindenberg Research on January 24, with group cumulative market losses now exceeding $110 billion, raising concerns about wider financial contagion.
Opposition parties, who disrupted proceedings last week by calling for a parliamentary panel to investigate the saga, have questioned Indian Prime Minister Narendra Modi's friendship with Adani.
On Monday, protesters were also outraged by investments in the Adani Group by the state-backed Life Insurance Corporation (LIC) and the State Bank of India (SBI).
Adani has responded in detail to the Hindenberg report's allegations of stock manipulation, use of tax havens, and unsustainable debt.
The billionaire and Modi are both from Gujarat, and Adani has repeatedly denied allegations made by Modi's opponents that he benefited from their friendship. Modi's government has also denied allegations that it favored Adani.
Protesters held banners and shouted slogans against Adani at New Delhi's Jantar Mantar, a Mughal-era observatory that also serves as a protest site for all causes. Some people broke through barricades, forcing police to arrest them.
"Common man has invested his money in a businessman's (Gautam Adani) company and the government is trying to save him. The government is supporting the businessman (Adani) and not the common man," Uttar Pradesh Congress Committee General Secretary Shiv Panday was quoted as saying by ANI news agency.
Hundreds of Congress members demonstrated across the country, including outside the offices of state-owned insurer Life Insurance Corporation (LIC) and state-owned bank State Bank of India (SBI), both of which have exposure to Adani group companies.
Some people set fire to a suitcase with the SBI logo at Jantar Mantar. In Mumbai, a protester held a placard with Adani's photo and the LIC logo, explaining with a bar chart "How much has LIC invested in Adani Group".
LIC owns 4.23% of the flagship Adani company, as well as a 9.14% stake in Adani Ports and a 5.96% stake in Adani Total Gas. SBI disclosed last week that its total exposure to Adani Group was 0.9% of its total loan book, or approximately 270 billion rupees ($3.30 billion).
A request for comment was not responded to by LIC or SBI.
Separately, Adani Group's attempt to calm investor nerves on Monday failed to stop the market rout. It announced that it would repay $1.1 billion in loans secured by pledged shares in Adani Ports and Special Economic Zone, Adani Transmission, and Adani Green Energy, allowing it to reclaim the shares.
Adani Enterprises shares fell 0.9% on Monday after falling as much as 9.6% in early trading. Adani Transmission fell 10%, while Adani Green, Adani Total Gas Ltd, Adani Power, and Adani Wilmar each fell 5%.
Adani Ports was the only stock to outperform the market, rising 9.3%.
The crisis has snowballed into the most serious business and reputational challenge for Adani, 60, whose fortunes have risen rapidly in recent years as he expanded his conglomerate's business interests, which range from ports to mining.
Both houses of India's parliament were adjourned for the third day in a row on Monday, amid protests and calls for an investigation.
As a result of Hindenburg's report, Adani Group's flagship company, Adani Enterprises Ltd, was forced to abandon a $2.5 billion share sale last week, and Adani lost his title as Asia's richest person and fell down the global wealth rankings.
According to Reuters, Adani planned to issue a credit report by Friday to address Hindenburg's concerns about its liquidity.
According to a source with direct knowledge of the situation, the report will be released this week.
The stock market crash prompted a flurry of credit rating downgrades on Friday, with Moody's warning that the group may struggle to raise capital and S&P lowering its outlook on two group companies.
To reassure investors, India's banking and market regulators, as well as the government, have launched investigations. According to Reuters, the latter has written to various custodian banks requesting information on beneficial owners of offshore funds and foreign portfolio investors (FPIs).

Christopher J. Mitchell

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