India’s market regulator is examining a recent crash in shares of Adani Group and looking into any possible irregularities in share, a source with direct knowledge of the matter told Reuters on Wednesday. The Securities and Exchange Board of India’s (SEBI) examination comes on a day when Adani Group shares plunged, extending losses in seven listed companies to $86 billion.
Spokespersons for Adani Group and SEBI did not immediately respond to a request for comment.
SEBI is undertaking a full-scale examination of the fall in shares, the source said, declining to be identified as the matter is confidential.
The share plunge was sparked by a report by Hindenburg Research last week which raised concerns about high debt and the valuations of the seven listed Adani companies. The group has denied the allegations, saying the short-seller’s narrative of stock manipulation has “no basis” and stems from an ignorance of Indian law. It has always made the necessary regulatory disclosures, it added.
The source told Reuters the Indian market regulator is also looking into any possible price manipulation of Adani group stocks, as well as examining possible irregularities in the $2.5 billion share sale of the flagship firm Adani Enterprises, which concluded on Tuesday.
While the share offering’s book building process was covered only 3% on Monday, it was fully subscribed on Tuesday as foreign institutional investors and corporate funds flooded in.
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“All key departments – corporate finance, surveillance department at the regulator are examining the share price fall. Exchanges are also sending a report,” said a second source familiar with the matter.
The first source added that SEBI was also looking into allegations of dealings between Adani Group and related entities cited in the report.
On Wednesday, a day after the share sale closed, Adani Enterprises plunged 28%. Adani Ports and Special Economic Zone dropped 19%.
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