Troubled Gautam Adani Group has suffered another major setback after the US short-seller Hindenburg Report. MSCI, a leading index operator, announced that it has decreased the free float designation for four securities belonging to the Adani Group. The affected securities include Adani Enterprises, Adani Total Gas, Adani Transmission, and ACC.
However, MSCI confirmed in its statement that the free float of the remaining companies within the group will remain unchanged. It is important to note that the MSCI index includes eight companies within the Adani Group.
The four companies for which reduction in free float designation has been announced have a combined weighting of 0.4% in the MSCI Emerging Market Index as of January 30. The changes will be effective from March 1.
On Thursday, following the news of MSCI’s review, the group’s company shares saw a decline, with Adani Enterprises, the group’s flagship company, experiencing a drop of approximately 15 percent. Nine out of ten group companies closed with losses, while the BSE Sensex increased by 142 points. It is worth mentioning that the Hindenburg report caused the market cap of the seven listed companies belonging to billionaire Gautam Adani to fall by $110 billion.
Recently, MSCI said that it is reviewing the ‘free float’ status of some securities of the Adani group companies. According to MSCI (Morgan Stanley Capital International), ‘free float’ means the number of shares available for purchase by global investors in the market in proportion to the shares available with all participants in the market. In fact, the decision was taken after some market participants had questioned the inclusion of Adani Group shares in the index.
According to MSCI regulations, free float is the portion of a security that can be acquired by global investors. It’s worth noting that Nathan Anderson views MSCI’s decision as validation of the Hindenburg report.
Nikkei Asia has released a report on the debt of the Adani Group, in which it states that the group’s total debt amounts to ₹3.39 trillion (₹41.1 billion) and represents a minimum of 1% of the Indian economy. The report notes that according to the International Monetary Fund, India’s nominal GDP was Rs 273 trillion by October 2022, which is roughly equal to 1.2% of Adani Group’s total debt.