BENGALURU, Feb 1 (Reuters) - Shares in Indian tycoon Gautam Adani plunged again on Wednesday as his companies' losses widened to $86 billion following a report of short-selling in the United States, which also saw the billionaire lose his title as Asia's richest person.
Wednesday's stock losses saw Adani slip to 15th place on Forbes' list of richest people with an estimated net worth of $75.1 billion, ahead of his rival Mukesh Ambani, chairman of Reliance Industries Ltd (RELI.NS), which ranks ninth with net assets of $83.7 billion.
Prior to the critical report by U.S. short-seller Hindenburg, Adani had ranked third.
The losses are a dramatic setback for Adani, the billionaire-turned-school dropout whose fortunes have grown rapidly in recent years in line with the stock values of his companies, which include ports, airports, mining, cement and energy. Now the tycoon is struggling to stabilise his companies and defend his reputation.
The stock slide came just a day after Adani Group managed to win investor support for a $2.5 billion sale of shares in flagship Adani Enterprises, which some saw as a show of investor confidence in times of crisis.
Last week's report by Hindenburg Research accused the group of improper use of offshore tax havens and stock manipulation. It also raised concerns about the high debt levels and valuations of seven listed Adani companies.
The group has denied the allegations, saying the short-seller's claims of stock manipulation are "without any basis" and based on an ignorance of Indian laws. The company has always made the required regulatory disclosures, it added.
Shares of Adani Enterprises (ADEL.NS), often described as an incubator of Adani businesses, plunged 28% Wednesday, bringing losses since the Hindenburg report to more than $18 billion. Adani Ports and Special Economic Zone (APSE.NS) fell 19%. Both stocks recorded their worst day ever.
"The kind of decline we are seeing in Adani shares is scary," said Avinash Gorakshakar, head of research at Profitmart Securities in Mumbai.
Adani Power (ADAN.NS) and Adani Wilmar (ADAW.NS) fell 5% each, and Adani Total Gas (ADAG.NS) slumped 10%, with all three stocks falling below their daily highs. Adani Transmission (ADAI.NS) fell 3% and Adani Green Energy (ADNA.NS) dropped 5.6%.
Adani Total Gas, a joint venture with France's Total (TTEF.PA), was the biggest victim of the short sellers' report, losing about $27 billion.
After losing $86 billion in recent days, the seven listed companies in the Adani Group now have a total market capitalization of about $131 billion.
SCRUTINY
Underscoring the nervousness in some quarters, Bloomberg reported Wednesday that Credit Suisse (CSGN.S) will no longer accept bonds issued by Adani Group companies as collateral for margin loans to its private banking clients.
Deven Choksey, managing director of KRChoksey Shares and Securities, said this was a major factor in Wednesday's price losses.
Credit Suisse had no immediate comment.
"There was a slight bounce yesterday after the share sale went through after it seemed unlikely at a certain point, but now the weak market sentiment after the bombshell Hindenburg report has reappeared," said Ambareesh Baliga, an independent market analyst based in Mumbai.
The fact that the shares fell despite Adani's rejoinder clearly shows that the mood among investors suffered. It will take a while for it to stabilise," Baliga added.
Shares in cement companies ACC (ACC.NS) and Ambuja Cements (ABUJ.NS), which the Adani Group acquired from Switzerland's Holcim (HOLN.S) last year for $10.5 billion, fell 6.2% and 16.7%, respectively.
An Australian regulator said Wednesday it will review Hindenburg's allegations to determine whether further investigation is warranted.
Data also showed foreign investors sold a net $1.5 billion worth of Indian shares after the Hindenburg report, the largest outflow for four consecutive days since Sept. 30.
The Adani Group headache is expected to continue for some time.
The Securities and Exchange Commission of India, which is looking into the conglomerate's operations, has said it will add the Hindenburg report to its own preliminary investigation.
State-run Indian Life Insurance Corporation (LIC.NS) said Monday it would seek clarifications from Adani management on the short-selling report. LIC owned a 4.23% stake in Adani Enterprises and more than 9% in Adani Ports and Special Economic Zone at the end of December. The insurance giant was also one of the main investors in Adani's recent share sale.
Siddhartha Mohanty, one of LIC's executive directors, said in interviews Monday that the insurer was looking into the Adani group but was positive about its investments.
Hindenburg said in its report that it has been shorting U.S. bonds and derivatives of Adani Group that are not traded in India.