Stocks tied to Indian business leader Adani stumble as foreign funds freeze

Shares of companies linked to Indian businessman Gautam Adani, one of Asia’s richest men, fell sharply after the country’s largest securities depository froze the accounts of foreign funds holding billions of dollars in stakes.

Four of the six companies listed in the Adani Group slipped the maximum allowed under exchange rules on Monday, while billionaire pioneer Adani Ports & Special Economic Zone slipped 19 percent.

The drop followed the announcement by India’s National Securities Depository that it had frozen the accounts of Mauritius-based Albula Investment Fund, Cresta Fund and APMS Investment Fund. India’s Economic Times reported that the move, which prevents funds from trading shares, was due to a lack of documentation on the entities’ beneficial ownership.

Adani’s net worth has risen by $44 billion to as much as $78 billion this year based on rising stock prices for companies tied to the energy conglomerate to Apple. This led him to a position The second richest man in Asia, sweeping past Chinese tech giants like Alibaba Jack Ma and ByteDance founder Zhang Yiming and within walking distance of the Reliance Industries chair Mukesh Ambani.

Declines in shares related to Adani on Monday wiped out more than $6 billion from the entrepreneur’s net worth, according to Bloomberg figures, leaving it just under $71 billion.

In the past year, shares of Adani Gas Transportation Co. by 640 percent, Adani Enterprises by 860 percent, and Adani Total Gas by 1,030 percent.

But analysts have raised concerns about stocks that are held by a small handful of offshore funds and have a small public float.

Bloomberg Intelligence analysts wrote in a note last week that the rally in shares in Adani Total Gas, Adani Enterprises and Adani Transmission looked “extended.”

“Among the largest foreign investors, there are a few Mauritius-based funds that hold more than 95 per cent of the assets in these companies,” the analysts said. “Such concentrated positions, combined with negligible internal ownership, create a disproportionate risk of return as large investors clearly avoid Adani.”

Adani’s group declined to comment. NSD did not immediately respond to a request for comment.

Recently hit the stock market in India Standard heights Even as the economy struggles to recover from a severe second wave of coronavirus infections.

Index provider MSCI added three Adani stocks to the India Index in May.

Adani has attracted international partners in its quest to become one of the largest renewable energy companies in the world. sum in january It bought a 20 percent stake in Adani Green Energy, which was last month acquired The Indian power unit of Japanese technology group SoftBank.

Infrastructure mogul faced criticism over controversial carmichael coal mine in Australia, which has been the subject of global environmental protests.

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