Adani stands exposed.

Adani Enterprises nosedives 30% on Feb 1; what triggered the crash?

Credit Suisse development indicates scrutiny of Adani Group’s finances on the rise

Prashun Bhaumik | Mumbai | 1 February, 2023 | 11:00 PM

Shares of the flagship company of Adani Group, Adani Enterprises (NS:ADEL) crashed 30% in Wednesday’s intraday trade and closed 26.7% lower at Rs 2,179.75 apiece in the session despite a successful closing of Rs 20,000 crore follow-on public offer (FPO) on Tuesday.

The mega-cap stock nosedived on Wednesday, following a report that the Switzerland-based global investment bank Credit Suisse (SIX:CSGN) Group AG stopped accepting the bonds of the ports-to-power conglomerate’s companies as collateral for margin loans to its private banking clients.

The Zurich-based investment banking major has assigned a zero lending value for the notes sold by the Adani Group companies – Adani Ports and Special Economic Zone (NS:APSE), Adani Green Energy (NS:ADNA) and Adani Electricity, stated sources as cited in a Bloomberg report.

A private bank cutting the lending value to zero leads clients to top up with cash or another form of collateral, and failing to do so can cause their securities to liquidate.

Credit Suisse’s development indicates that scrutiny of Adani Group’s finances is on the rise after the US investment research firm Hindenburg’s allegations on the conglomerate.

However, other banks are continuing to lend against Adani’s debt, including the Bank of Singapore, added the report.