Four of Adani’s listed companies are on the brink of the delisting threshold due to high promoter ownership, according to a report released by Hindenburg Research, an investment research firm with a focus on activist short-selling. The report also said that five companies in the group (all but Adani Ports and Adani Wilmar) have current ratios below 1.0, suggesting a heightened short-term liquidity risk.
Publicly listed companies in India are subject to rules that require all promoter holdings to be disclosed. Rules also require that listed companies have at least 25 per cent of the float held by non-promoters in order to mitigate manipulation and insider trading. Adani Enterprises, Adani Transmission, Adani Power, and Adani Total Gas all report 72-plus per cent of their shares held by insiders. Furthermore, Adani Wilmar, a new company with current insider ownership of 87.94 per cent, must reduce its insider holdings to 75 per cent.
The report said that for many Adani listed companies, a large portion of their “public” shareholders are funds based in the opaque jurisdiction of Mauritius. “Importantly, funds identified in this section, which we believe should be classified as “promoter” (insider) entities, hold enough shares of Adani listed companies to put four of them well over the 75% threshold, triggering delisting.
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“Our research indicates that offshore shells and funds tied to the Adani Group comprise many of the largest “public” (i.e., non-promoter) holders of Adani stock, an issue that would subject the Adani companies to delisting, were Indian securities regulator SEBI’s rules enforced,” the report alleged. “Many of the supposed “public” funds exhibit flagrant irregularities such as