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Adani stocks fall again despite denial of shareholder fund freeze

Indian conglomerate says suspensions were old and had nothing to do with it

Gautam Adani, founder of Adani Group, is Asia's second richest man.   © Reuters

MUMBAI -- Shares in Adani Group companies were slammed for a second day on Tuesday despite a denial by the conglomerate that the funds of three of its shareholders have been frozen by India's National Securities Depositary.

Adani Transmission and Adani Total Gas stocks closed down 5.0% at 1,446.4 rupees and 1,467.7 rupees, respectively, on the Bombay Stock Exchange. Adani Power also fell 5.0% to 133.90 rupees. These three stocks were extending a drop of 5.0% each on Monday. Adani Port and Special Economic Zone closed 1.6% at 756.5 rupees, extending an 8.5% fall on Monday.

Adani Green, which recently bought SoftBank Group's renewable energy assets in India, also ended 1.0% lower at 1,200 rupees, after a 0.39% fall on Monday. Flagship company Adani Enterprises was the only one to reverse some of its 6.3% loss on Monday, closing up 1.6% at 1,525.8 rupees.

As of last week, the market capitalization of six listed Adani firms were worth 9.5 trillion rupees ($129.6 billion).

Investors were reacting to the Economic Times report on Monday that the National Securities Depositary had frozen the accounts of Port Louis-registered funds -- Albula Investment Fund, APMS Investment Fund and Cresta Fund -- that held stakes worth 435 billion rupees in different Adani Group companies. Since then, those companies had lost $16 billion in market value.

"We regret to mention that these reports are blatantly erroneous and is done to deliberately mislead the investing community," Adani said in a filing on BSE on Monday. "This is causing irreparable loss of economic value to the investors at large and reputation of the group."

The group issued another statement on Tuesday morning quoting a response from the National Securities Depositary that said the accounts were "suspended for debit" on June 16, 2016. While the three funds still show up on the depositary's list of frozen accounts as of May 31, Adani said they relate to old cases.

Reuters reported on Monday that, a senior official from the National Securities Depositary said the accounts of the funds that were frozen held other securities, and not those of Adani companies, adding that the suspension was "not new."

Adani Group shares have had a great run recently. Until Monday's move, Adani Total Gas' share had surged 1,422% over the past 12 months, while Adani Enterprises stock had climbed 987%.

The rally in those shares also propelled billionaire Gautam Adani, who controls the conglomerate, to the position of the second richest man in Asia after Reliance Industries Chairman Mukesh Ambani. According to Bloomberg Billionaires' Index, Adani's net worth was around $77 billion as of June 11.

Last month, MSCI, the index compiler, included three more companies of the Adani Group in its benchmark for India. In all, five Adani stocks are included in the MSCI.

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