More troubles for Adani: MSCI to review free-float status, stocks dip

Troubles mounted further for the embattled Adani group on Thursday as financial index provider MSCI said it was reviewing the free-float status of billionaire Gautam Adani-led group companies that triggered fresh slump in the conglomerate’s stocks with flagship Adani Enterprises tanking over 10 per cent.

In another major development the world’s largest stock investor Norway’s sovereign wealth fund announced that it has sold all its stakes in Adani group companies. Norway Wealth Fund has sold stakes in three Adani group companies worth over $200 million since the start of the year.

Also Read: Norway's sovereign wealth fund pulls out Rs 1,651 crore from Adani firms

“MSCI has determined that the characteristics of certain investors have sufficient uncertainty that they should no longer be designated as free float,” New York-based MSCI said in a statement.

MSCI defines a free float as the proportion of shares that can be bought publicly in share markets by international investors.

MSCI (Morgan Stanley Capital International) review meeting is scheduled later on Thursday. The MSCI indexes are reviewed quarterly, while the rebalancing of the indexes takes place bi-annually.

The change in free-float status will negatively impact the company’s stocks. Adani group companies' stocks slumped after the MSCI announcement. Adani Enterprises dipped 10.72 per cent to Rs 1927.30. Adani Total Gas hit the lower price band by plunging 5 per cent. Adani Power slumped 5 per cent. All the group companies, except Adani Wilmar closed in the red.

Also Read: Adani to prepay Rs 4,100 crore loan as banks balk to refinance

Reacting to the MSCI announcement, Hindenburg Research's founder Nathan Anderson said it validates Hindenburg's report findings.

After a review of Adani, MSCI just announced: “characteristics of certain investors have sufficient uncertainty that they should no longer be designated as free float pursuant to our methodology.” We view this as validation of our findings on offshore stock parking by Adani, Anderson said in a tweet.

The MSCI indexes are considered a benchmark for global institutional investors like index funds, hedge funds and exchange-traded funds to assign their allocations.

Meanwhile, tax authorities inspected Adani Wilmar premises in Himachal Pradesh over possible tax evasion. According to a senior state government official, during the inspection tax officials took stock of the inventories at an Adani Wilmar godown, besides checking relevant documents.

“One of Adani Wilmar's depot warehouses at Parwanoo, Himachal Pradesh was visited by GST officials yesterday evening. The staff extended their support during this routine inspection, fully cooperating with the officials and local authorities," an Adani Wilmar spokesperson said in a statement.