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MSCI to change free float status of some Adani securities

Crowd, Person, Audience Adani Group
The probe is part of Sebi's investigation into the Indian conglomerate which follows a January report by short-seller Hindenburg Research

Index provider MSCI said on Thursday it had determined that some Adani securities should no longer be designated as free float after market participants raised concerns about the eligibility of the Indian conglomerate’s companies for some of its indexes.

Changes for Adani securities associated with its MSCI Global Investable Market Indexes are due to be announced later on Thursday as part of its regular review for February, it added.

“MSCI has determined that the characteristics of certain investors have sufficient uncertainty that they should no longer be designated as free float pursuant to our methodology,” it said in a statement.

It defines the free float of a security as the proportion of shares outstanding that is considered available for purchase in public equity markets by international investor.

Adani Group did not immediately respond to a Reuters request for comment.

The group led by billionaire Gautam Adani has been engulfed in crisis since US short-seller Hindenburg Research published a report on January 24 accusing the conglomerate of improper use of offshore tax havens and stock manipulation. It also raised concern about high levels of debt and what it said were excessive valuations.

In response to the MSCI statement, Hindenburg founder Nathan Anderson wrote on Twitter: “We view this as validation of our findings”.

The Adani Group has denied the allegations, saying the short-seller’s narrative of stock manipulation has “no basis” and stems from an ignorance of Indian law.

The report and its aftermath wiped out $110 billion off Adani’s seven main listed stocks in slightly more than a week, and its flagship Adani Enterprises was forced to abandon a $2.5 billion stock offering.

Some of the companies’ shares have since regained some ground.

Hindenburg has said it had taken short positions in Adani’s US-traded bonds and non-Indian traded derivatives.