Gautam Adani loses over $7 billion in net worth after questions over the meteoric rise in group stocks

• Accounts of three foreign funds with over ₹43,000 crore in Adani Group shares suspended
• Market regulator SEBI is also reportedly investigating if the Adani Group companies’ share price has been manipulated.
• Shares of all the six listed Adani Group companies hit their respective lower circuits in the first hour of trading.

Shares of all the six Adani Group companies listed on the Indian stock exchanges hit lower circuits in the opening session today morning (June 14). Adani Ports and Adani Transmission share prices were down by 15% each, while those of the other four companies were down by 5% each.

The downward spiral in the share price of these companies has wiped out over $7.6 billion (approx. ₹55,000 crore) net worth of Gautam Adani, according to Forbes’ real-time billionaires list, as of 10:00 a.m., on Monday.

The meltdown was triggered by reports that the National Securities Depository Limited (NSDL) suspended the accounts of three foreign funds ⁠— all reportedly based out of the same address ⁠— that have over ₹43,000 crore invested in the Adani Group.

The three accounts in question are Albula Investment Fund, Cresta Fund and APMS Investment Fund. Notably, the accounts were suspended on or before May 31.

According to an Economic Times report, the suspension could be due to insufficient disclosures under the Prevention of Money Laundering Act (PMLA).

The funds had time till 2020 to disclose details on common ownership and personal details of key employees. But they didn’t. “Custodians typically warn their clients before such action but if the fund doesn’t respond or fails to comply, accounts can be frozen,” the report added, quoting an unnamed source.

The rules for Indian funds investing in the stock market do not allow managers to invest in any one stock or group beyond a certain limit. But the same rule does not apply for foreign portfolio investors.

According to The Morning Context, a research and media company, the three funds in question derive more than 95% of their net worth from their investments in the Adani Group companies.

Source: Trendlyne.com, via The Morning Context

There are two fears emerging out of the data above. One, the funds hoarding Adani group shares to reduce the number of the tradable shares in the market. And, therefore, allowing the value of the shares to inflate. Two, this may be a case of round tripping of money, whereby Indian investors may be investing via another country, to bypass the rules. None of these premises are proven yet.

The Economic Times report also states that the market regulator, Securities Exchange Board of India (SEBI), is investigating if the share price of Adani Group companies has been manipulated. The investigation is still ongoing, the report added.

Market cap of Adani Group companies has skyrocketed over the last year

The Ahmedabad-based group has leapfrogged from being a medium-sized one to one of the richest family-based businesses in India, leaving behind the likes of the Tatas, Birlas, Wadias among others.

In total, the six Adani Group companies had a market cap of ₹1.64 lakh crore at the end of May last year. This has now surged to over ₹8.5 lakh crore – an increase of over 420%.

An investment of ₹10,000 across the six listed Adani group companies would be worth ₹52,000 now – a return of 420% in just 12 months.


Update: Adani Ports and Logistics, part of the Adani Group, has issued the following statement.

“We regret to mention that these reports are blatantly erroneous and is done to deliberately mislead the investing community. This is causing irreparable loss of economic value to the investors at large and reputation of the group.

Given the seriousness of the article and its consequential adverse impact on minority investors, we requested Registrar and Transfer Agent, with respect to the status of the Demat Account of the aforesaid funds and have their written confirmation vide its email dated 14th June, 2021, clarifying that the Demat Account in which the aforesaid funds hold the shares of the Company are not frozen.”

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