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Adani Group seeks to issue shares for first time since short selling attack

Indian tycoon Gautam Adani’s companies are seeking to issue shares for the first time since a short seller accused the billionaire’s group of accounting fraud and stock price manipulation this year.

Two Adani Group companies will issue shares in a bid to raise up to $2.5bn, they said in stock exchange filings on Saturday, in a sign that the previously growth-hungry company is seeking to return to business as usual in the wake of the accusations by New York-based Hindenburg Research in January.

Adani denied Hindenburg’s accusations in a 413-page rebuttal.

The market turmoil it triggered forced the group to call off a $2.4bn stock offering by flagship company Adani Enterprises as its share price plunged. At the worst point in the market rout, Adani’s combined stock lost about $150bn in value.

Its share price has since rallied somewhat, though it remains well below its pre-sell-off level.

The board of Adani Enterprises, which includes Adani’s coal trading and airport businesses, on Saturday approved a plan to raise Rs125bn ($1.5bn) by selling shares. The board of Adani Transmission, an electricity unit, approved an Rs85bn ($1bn) raise.

The announcements were made in separate stock exchange filings after the board meetings.

The two companies said shares may be sold by “qualified institutional placement” — a less regulated route than a market offering for corporates to raise money from institutions such as banks or funds — or other methods. They did not indicate who the buyers were likely to be, or what the funds would be used for.

Since Hindenburg published its report Adani has tried to reassure investors by cutting down debt, including paying back $2.65bn of share-backed loans, and holding off on non-core investment.

This week Adani Group said that capital expenditure “in new areas of investment, outside the core, is being re-evaluated in the short term”.

A $1.9bn secondary share sale to US-based investment firm GQG Partners in early March helped boost its stock price. In quarterly earnings this month, Adani Enterprises reported profits after tax had more than doubled to Rs7.8bn ($95mn) compared with the same period last year.

But this week global index provider MSCI dropped Adani Transmission and Adani Total Gas — Adani’s city gas business in partnership with France’s Total Energies — from its India equities benchmark.

MSCI reduced its assessment of how much of the two companies’ stock is available to be traded after the Hindenberg report, and on Friday said that the stocks no longer met its minimum requirements for free float size.

A third listed company, Adani Green Energy, had been due to decide on a fundraising on Saturday. But the renewables company said the meeting had been rescheduled to May 24, citing “certain exigencies”.

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