The crisis engulfing Adani Group shows no signs of abating, after the Indian industrial conglomerate faced a US$500mln margin call on its US$1.1bn loan with Barclays (LON:BARC), Citigroup (NYSE:C) and Deutsche Bank (ETR:DBKGn), the Financial Times has reported.
Mogul Gautam Adani, who until recently was Asia’s richest man, opted to repay the share-backed loan in full rather than stump up additional collateral, according to the article.
On repayment of the loan, 168 million shares in Adani Ports, 27 million in Adani Green Energy, and 12 million in Adani Transmission will be added to the free float.
Additional liquidity will be needed among Adani Group’s subsidiaries, given news that the Morgan Stanley (NYSE:NYSE:MS) Capital International (MSCI) index tracker is prepared to review its market weighting in Adani shares.
MSCI stated that certain Adani Group shareholdings should no longer be designated as free float "pursuant to our methodology”.
As a result, investors tracking MSCI’s equity benchmarks are likely to recalibrate their portfolios to account for smaller weightings in Adani stocks, potentially leading to further sell-side pressure.
Up to US$120bn in market value has been wiped from the sprawling group of Adani subsidiaries in the wake of a scathing report released by activist investment firm and infamous short seller Hindenburg Research on January 24.
Hindenburg Research: From niche activist investor to Gautam Adani's US$50bn headache
Making the short-selling case for Adani, Hindenburg has accused the multinational of everything from stock manipulation to accounting fraud and money laundering.
Gautam Adani has vigorously denied all allegations, but his personal wealth has severely plummeted; in the space of three weeks, he went from the third-richest person in the world to the 18th.
Mass protests across India have been mounting in the wake of the scandal, with prime minister Narendra Modi also being targeted due to his affiliations with the beleaguered multinational.