Gautam Adani loses $10 billion in an hour as crisis hits group stocks

MUMBAI: Gautam Adani, the promoter of the Adani Group of companies and the second richest man in the country, lost as much as $10 billion of his personal wealth, on a notional basis, within an hour of the Opening Bell on Dalal Street on Monday.

As on Friday, Gautam Adani’s personal wealth stood at $77 billion, according to the Bloomberg Billionaires’ Index.

Shares of Adani companies nosedived up to 25 per cent in trade after The Economic Times reported that the National Securities Depository Ltd (NSDL) froze the accounts of three foreign portfolio investors, which control a large chunk of the group’s non-promoter shares. Albula Investment Fund, Cresta Fund and APMS Investment Fund – the three funds that were frozen -- together own over Rs 43,500 crore worth of shares in four Adani Group companies, the report said.

NSDL had likely suspended the accounts of these registered FPIs on May 31, according to the ET report.

Prior to Monday’s selloff, Adani Group stocks had had a stellar run over the past 12 months aided by the group’s focus on renewable and annuity-type business models as well as the entry of marquee global companies and investors in certain businesses of the Gujarat-based conglomerate.

The run-up in the stocks of Adani Group, listed on the National Stock Exchange and BSE, had made Gautam Adani the fastest wealth creator on the planet so far in 2022. The second-richest man in Asia till Friday had added $43 billion to his personal wealth due to rapid appreciation in the group’s market value.

The market capitalization of Adani Group went from a little over Rs 1 lakh crore at the bottom of the crash in March 2020 to nearly Rs 10 lakh crore as on Thursday, demonstrating the parabolic rise in the group’s fortunes. However, much of that rise has also been supported by low liquidity in the stocks that had led to allegations recently of stock manipulation.

Most of the listed companies of Adani group have nearly 75 per cent of the holding in the hands of the promoters, while the majority of the free-float shares are in the hands of six to seven foreign portfolio investors. That leaves a very marginal number of shares for day-to-day traders or retail investors, which created an artificial demand on the group’s stocks, especially as their initial performance in mid-2020 attracted cash-rich retail investors.

In Monday’s selloff, the group lost close to $15 billion of its market capitalization, when the stocks hit their day’s lows just after the Opening Bell. However, at the time of publishing of this report, most of the group stocks had recovered significantly from the day’s low. At 12:50 pm, shares of , , Adani Ports and Special Economic Zone, Adani Green Energy, Adani Total Gas and Adani Transmission were down 5-12 per cent.