June 15, 2021: Adani shares fell on Monday by about 5% to 25% after the National Securities Depository Ltd (NSDL) froze the accounts of three foreign funds that are among the top stakeholders in the firms.
Adani shares take a hit
Adani shares plunged as much as 25%, its steepest fall in nearly a decade. Nifty 50-listed Adani Ports and Special Economic Zone fell as much as 19% before paring some losses.
The NSDL has frozen the accounts of Albula Investment Fund, Cresta Fund and APMS Investment Fund, its website shows without citing a reason for the freeze.
Reuters was unable to reach the funds for comment.
It was not immediately understood if the funds had functioning websites.
The three funds feature among the top twelve investors and owned about 2.1% to 8.91% stakes in five Adani Group companies as of March 31, 2020, annual investor presentations show.
The value of their stakes in Adani Power, Adani Enterprises, Adani Green, Adani Transmission and Adani Total Gas Ltd spiked over ten-fold since end-March 2020 to 569.32 billion rupees ($7.78 billion) as of Friday, according to Reuters calculations.
Why Adani shares went down
On Monday, shares fell sharply after the market reacted to reports that the National Securities Depository Limited (NSDL) has frozen the accounts of three foreign portfolio investors (FPIs). Adani Total Gas fell 5 per cent to Rs 1,544.55, Adani Green Energy by 5 per cent to Rs 1,165.35, Adani Transmission by 5 per cent to Rs 1,517.25, Adani Power by 5 per cent to Rs 140.90, and Adani Enterprises by 11.28 per cent to Rs 1,420.80 as of 11.45 IST.
This is in line with a broad rally in shares of Adani Group companies over the period that has made Chairman Gautam Adani the second richest Asian, behind Mukesh Ambani who is chairman of oil-to-telecom conglomerate Reliance Industries.
Shares of Adani Enterprises have risen over 10-fold in the past year to Friday, while Adani Transmission shares have gained more than eight-fold and Adani Total Gas Ltd shares have jumped 1,114%.
Adani Ports Ltd has risen 148%, while Adani Green has grown 267% and Adani Power has jumped nearly four-fold over the past year.
Why three FPI accounts been frozen?
A report in the Economic Times said the freeze on the three accounts could be because of insufficient disclosure of information related to beneficial ownership. An Adani spokesperson did not immediately respond to a request seeking comment. India’s securities regulator SEBI and NSDL did not respond to requests seeking comment.