Home / Markets / Stock Markets /  Adani shares crash amid confusion on investor a/c freeze

MUMBAI : The Adani Group lost nearly 44,898 crore in market value on Monday as shares of group companies plunged following a media report that the National Securities Depository Ltd (NSDL) has frozen accounts of three foreign funds who are major stakeholders. The ports-to-energy conglomerate has denied the report.

The accounts of Albula Investment Fund, Cresta Fund and APMS Investment Fund were frozen on or before 31 May, according to the depository’s website, although that only reflects part of the story.

Shares of six listed Adani group firms tumbled 5-25% during the day as The Economic Times report spooked investors. Adani Enterprises, the group flagship, closed 6% lower, Adani Ports shed 8.4% while Adani Transmission, Adani Total Gas, Adani Green Energy and Adani Power hit the 5% lower circuit. The three funds are stakeholders in all these companies except Adani Power and Adani Ports, as on 31 March.

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In a statement, the Adani group said the demat accounts of the three foreign portfolio investors (FPIs) were not frozen, calling the report “blatantly erroneous". In a regulatory filing, Adani Enterprises said the “report 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," it said.

Adani Enterprises said in a statement that it has a written confirmation from the registrar and transfer agent (RTA), clarifying the demat account in which the aforesaid funds hold shares of the company were not frozen.

Meanwhile, APMS Investment Fund said in a statement that NSDL’s entry showed only a technical account-level freeze, and that its global trading operations continue to run normally. “The subject fund is not frozen by any means and maintains full as well as normal trading operations globally," it said.

A person close to the Adani group said on condition of anonymity that in March several FPIs with large exposures in some Indian listed firms were asked to furnish additional details regarding ultimate beneficial ownership. While most entities provided the details, a few missed the deadline set by the Securities and Exchange Board of India (Sebi).

The NSDL website lists thousands of other accounts too as “account level freeze" and “ISIN level freeze", though it is unclear what securities they hold or why they were frozen. The document says the listed addresses of the impacted entities were as per a Sebi order, suggesting that the freezing was a fallout of regulatory action.

As per Sebi regulations, an FPI cannot hold more than 10% equity stake in any listed Indian firm and no fresh purchases will be allowed till its holdings fall below the 10% threshold. “The key reason for seeking beneficiary details was to ascertain whether this rule was being flouted by any of these funds concerned," the person said.

In the past year, shares of Adani Group firms have soared, catapulting group promoter Gautam Adani as the second-richest man in Asia after Reliance Industries Ltd chairman Mukesh Ambani.

During the year, Adani Enterprises gained 741%, Adani Ports 100%, Adani Green 245%, Adani Transmission 650%, Adani Power 271% and Adani Total Gas 1,066%. Despite the meteoric rise in these stocks, the group firms have relatively low analyst coverage. Adani Ports has 21 buy ratings, four hold and one sell rating by analysts on Bloomberg, Adani Enterprises doesn’t have any buy or sell rating and just one hold rating.

The three funds feature among the top 12 investors and owned 2.1% to 8.91% stakes in Adani Group firms as of 31 March 2020, a Reuters report quoting company filings said.

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