New York: Global Index Managers. MSCI Inc will cut two Adani Group firms out of its India gauge, potentially dealing a blow to their shares which are trying to recover from the rout triggered by short-seller reports earlier this year.
Adani Transmission Ltd. and Adani Total Gas Ltd will be excluded from the India index effective at the end of trading on May 31 as a part of a quarterly comprehensive index review, according to a statement issued by MSCI on Thursday.
The exclusion followed a change in MSCI’s calculation on the amount of shares considered freely tradable on the public market for the two companies.
According to estimates by Brian Freitas, an independent equity analyst, published on SmartKarma, the exclusion would likely result in passive outflows of $186 million for Adani Total Gas and $203 million for Adani Transmission. MSCI’s decision was “mostly expected. However passive selling will keep both the stocks under pressure. Especially Adani Transmission, where there could be some fund raising as well,” he added.
Index Provider’s Actions Come As Billionaire Gautam AdaniThe group has been trying to raise funds as a major test of investor confidence in the group. Allegations of market manipulation and accounting fraud by Hindenburg Research in late January wiped out more than $150 billion from the group’s value at one point. Adani has denied the allegations.
Selling has eased in recent weeks as Adani tries to win back market confidence with a series of investor roadshows, early loan repayments and plans to ease its pace of spending on new projects.
MSCI said earlier this month that it would implement a reduction in weightings for Adani Transmission and Adani Total Gas in its index. The reduction was announced in February shortly after Hindenburg’s harsh report on the group, but its implementation was postponed.
Adani Transmission Ltd. and Adani Total Gas Ltd will be excluded from the India index effective at the end of trading on May 31 as a part of a quarterly comprehensive index review, according to a statement issued by MSCI on Thursday.
The exclusion followed a change in MSCI’s calculation on the amount of shares considered freely tradable on the public market for the two companies.
According to estimates by Brian Freitas, an independent equity analyst, published on SmartKarma, the exclusion would likely result in passive outflows of $186 million for Adani Total Gas and $203 million for Adani Transmission. MSCI’s decision was “mostly expected. However passive selling will keep both the stocks under pressure. Especially Adani Transmission, where there could be some fund raising as well,” he added.
Index Provider’s Actions Come As Billionaire Gautam AdaniThe group has been trying to raise funds as a major test of investor confidence in the group. Allegations of market manipulation and accounting fraud by Hindenburg Research in late January wiped out more than $150 billion from the group’s value at one point. Adani has denied the allegations.
Selling has eased in recent weeks as Adani tries to win back market confidence with a series of investor roadshows, early loan repayments and plans to ease its pace of spending on new projects.
MSCI said earlier this month that it would implement a reduction in weightings for Adani Transmission and Adani Total Gas in its index. The reduction was announced in February shortly after Hindenburg’s harsh report on the group, but its implementation was postponed.