Pressure mounts on Adani as Moody's changes outlook of some companies

Rating agency cites 'significant and rapid decline' in market value for action

MSCI said it was reviewing the number of shares linked to the Adani group that were freely tradeable in public markets. Bloomberg

Pressure mounted on embattled Indian billionaire Gautam Adani as Moody's Investors Service changed the ratings outlook for some Adani Group companies.

The adjustment came after index provider MSCI said it will reduce the weightings of four of his businesses in its indexes after a review of the number of shares that are freely traded.

Moody's changed the outlook on four issuers to negative, from stable, while maintaining the stable outlook on four other companies, it said in a statement on Friday.

The agency said it changed the outlook on the Adani companies following their "significant and rapid decline" in market value after a January 24 report from New York short-seller Hindenburg Research accused companies owned by Mr Adani of brazen market manipulation and accounting fraud.

Moody's changed the outlook to negative for Adani Green Energy, Adani Green Energy Restricted Group (comprising Adani Green Energy, Parampujya Solar Energy Private, Prayatna Developers Private), Adani Transmission Step-One and Adani Electricity Mumbai.

The rating agency maintained a stable outlook for Adani Ports and Special Economic Zone, Adani International Container Terminal Private, Adani Green Energy Restricted Group (comprising Wardha Solar (Maharashtra) Private, Kodangal Solar Parks Private and Adani Renewable Energy).

It also maintained a stable outlook for Adani Transmission Restricted Group.

Despite Mr Adani repeatedly repudiating Hindenburg Research's allegations, a subsequent sell-off wiped more than $100 billion off the market value of his listed companies and dislodged the Indian tycoon from the world’s top 20 richest people list, according to the Bloomberg Billionaires Index.

As of February 11, Mr Adani has lost $64.7 billion since the start of the year and is now ranked as the 21st richest person globally with a net worth of $55.8 billion, according to Bloomberg.

"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," MSCI said in a statement on Thursday.

"This determination has triggered a free float review of the Adani Group securities. MSCI will implement the resultant free float changes and associated market capitalisation determinations in connection with the February 2023 Index Review."

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

MSCI is cutting the weighting of Adani Enterprises, Adani Total Gas, Adani Transmission and ACC. The changes come into effect on March 1.

The four companies had a combined 0.27 per cent weighting in the MSCI emerging markets index, according to their prices as of February 8, according to Reuters.