Indian Billionaire Loses More Money This Week Than Anyone Else in the World

(Bloomberg) — Indian billionaire Gautam Adani’s dream of running up the global wealth rankings falters after a media report raising questions about some offshore investors triggered a rout in his conglomerate’s six listed stocks. According to the Bloomberg Billionaires Index, the 58-year-old tycoon has lost more money this week than anyone else, with his fortune tumbling from about $13.2 billion to $63.5 billion. He was closing the gap with Mukesh Ambani as Asia’s richest man just days ago.

The U-turn in shares started Monday after the Economic Times reported that India’s national share depository froze the accounts of three Mauritius-based funds because of insufficient information on the owners. The bulk of Albula Investment Fund holdings, Cresta Fund, and APMS Investment Fund — about $6 billion — are shares of Adani’s firms. Although the Adani group called the report “blatantly erroneous” and said it was “done to mislead the investing community deliberately,” investors concerned over transparency rushed for the exit. According to Bloomberg Intelligence, the Mauritius offshore funds hold more than 90% of their assets under management in Adani group companies.

“There should be greater clarity to ensure who the final owners of the shares are,” said Hemindra Hazari, an independent research analyst in Mumbai. These overseas funds “have been investors in Adani Enterprises Ltd. for more than a decade,” Adani Group said in a June 14 statement. “We urge all our stakeholders not to be perturbed by market speculations.” A spokesperson for the Adani Group declined to comment beyond the exchange filings sent this week. In identical exchange filings the same day, Adani group companies said they had written confirmation from the Registrar and Transfer Agent that the offshore funds’ demat accounts in which Adani shares were held “are not frozen.”

Albula and APMS said the funds are fully operational in separate statements dated June 14 emailed via their management company IQ EQ Fund Services (Mauritius) Ltd. on Thursday. “The fact is that the relevant NSDL entry for APMS Investment Fund Ltd. shows a technical ‘account level freeze’ only that has absolutely NO relevance to its normal FPI trading activities,” APMS said. The funds didn’t answer questions about why they hold such concentrated positions in Adani stock, nor did they share the names of their investors. Shares of Adani Green Energy Ltd., the mogul’s most valuable asset, slipped 7.7% this week. Adani Ports & Special Economic Zone Ltd. plunged 23% in four days. Adani Power Ltd., Adani Total Gas Ltd., and Adani Transmission Ltd. tumbled at least 18%, while flagship Adani Enterprises fell almost 15%. Three firms have slipped by their daily limit for four straight sessions.

The excitement around the Adani empire spanning ports, mines, and power plants had been building up over the past couple of years as the coal magnate looked beyond the dirtiest fossil fuel for expansion, seeking to dovetail his business interests with infrastructure priorities set by Prime Minister Narendra Modi. Investors have sent some of the group’s stocks soaring more than 500% since the start of 2020, betting the first-generation entrepreneur’s big push into sectors such as renewable energy, airports, data centers, and defense contracting will pay off. Earlier this month, Adani’s wealth was close to $80 billion.

Despite scant analyst coverage, MSCI Inc. included more Adani stocks in its India benchmark index, adding to the tailwind. Three of Adani’s listed companies were included in May, totaling the group to five. The inclusion also led to more mandated buying by investors that track the indexes. The quick surge combined with equity largely held by overseas funds with very little public float is a risk for Adani shares, BI analysts wrote last week. This week’s events have also focused on the opacity around the group and its key non-founder shareholders. “I expect the speculative cycle in Adani Group company shares has probably reached its term,” Travis Lundy, an analyst at Smartkarma, wrote in a note.