Indian billionaire Gautama Adani wants to reassure investors. (Picture pd)
According to a recent announcement, Gautam Adani and his family repaid a loan of 1.1 billion US dollars, which would not have been due until September 2024. This reassures investors in the short term.
Concerns had previously spread that Adani only had limited access to fresh funds. Shares in companies from his group of companies recovered, above all that of the flagship Adani Enterprises with a plus of around 15 percent recently. Since the allegations by the US short seller Hindenburg Research around two weeks ago, the losses still add up to around 46 percent.
Hindenburg had been critical of the financial situation of the Adani conglomerate. As a result, listed companies from the Indian kingdom had lost the equivalent of more than 100 billion euros in value, and thus more than half of the original market value. Adani denies the allegations and threatens legal action.
Hindenburg’s allegations had paved the way for already smoldering concerns about the debt-financed rapid expansion of the Adanis group of companies. This was reinforced by the halt to the planned sale of new shares last week. According to information from the Bloomberg news agency, Adani Enterprises stopped a planned bond issue at the weekend.
With the $1.1 billion early debt repayment that has now taken place, Adani regains access to stocks that secured the loans. That could improve the financing options for the Indian overall again. Recently, some banks stopped accepting the securities of the group, whose businesses range from port operations to power generation, as collateral for customer transactions.
Attention is now directed to the current business figures of Adani’s company. Adani Transmission reassured investors with a significant increase in profits in the past business quarter, while Adani Ports failed to meet expectations.
However, an analyst from Bloomberg Intelligence warned against premature optimism with a view to the price recovery of Adani shares. In addition to the loan repayment, technical factors also played a role after the shares were oversold. Prospective buyers should therefore wait for a successful test of the recent lows.
The Adani case is now also occupying Indian politics in view of the economic importance of his group of companies for the country and a possible spread of the crisis to the financial sector, for example.
