What is Adani foreign investors' a/c freezing all about? What triggered massive plunge in company's shares? Zee explains

Image Courtesy: adani.com

New Delhi: Shares of Adani Group of companies controlled by billionaire Gautam Adani took a massive hit on Monday over media reports that said that accounts of three foreign investor funds that own the company’s stocks had been frozen.

What is Adani foreign investors' accounts freezing all about that triggered massive plunge in shares?

Shares of Adani group companies tanked massively on Monday after reports came out that the National Securities Depository Ltd (NSDL) had frozen the accounts of three Mauritius-based funds that own the port-to-energy conglomerate.

The three funds feature among the top 12 investors and owned about 2.1 percent to 8.91 percent stakes in five Adani Group companies as of March 31, 2020, annual investor presentations show. The value of their holding in the five Adani group firms was valued at USD 7.78 billion before the stocks witnessed mayhem on Monday, said a PTI report.

Adani's group refuting claims said that the accounts were not frozen and any reports suggesting the contrary were "blatantly erroneous and misleading". While Adani group said all the accounts of its top shareholder funds were active, NSDL in an email to the group also confirmed their 'active' status.

NSDL in an email to Adani group said, "the status of demat accounts mentioned in your trail email are held in 'Active' status in NSDL system".

The NSDL website, however, showed the accounts of Albula Investment Fund, Cresta Fund and APMS Investment Fund -- which are registered at the same address in Port Louis -- as being frozen without citing a reason. It listed Albula Investment Fund Ltd, APMS Investment Fund Ltd and Cresta Fund Ltd as "account level freeze".

Adani refutes claims over freezing of 3 foreign funds

Adani Group flagship Adani Enterprises in a regulatory filing on Tuesday said, “We wish to inform you that the status of the Demat account of your shareholders may be verified from NSDL DPM (SHR) system available with your RTA and the beneficiary position details downloaded to your RTA. The current status of the Demat accounts of the shareholders is available in the DPM (SHR) system.”

The company further added, as may be verified from the said system, the status of Demat accounts mentioned in your trail email are held in 'Active" status in NSDL system. Further, the below Demat accounts are in 'Suspended for Debit' status in terms of SEBI order no. WTM/PS/58/IVD/JUN/2016 dated June 16, 2016:

Cresta Fund Ltd: Suspended for Debit

Albula Investment Fund Ltd : Suspended for Debit

APMS Investment Fund Ltd : Suspended for Debit

On Monday, the company issued a statement saying that the news headlines published in media that NSDL has frozen the accounts of 3 foreign funds-Albula Investment Fund, Cresta Fund and APMS Investment Fund holding shares in Adani Group Companies are “are blatantly erroneous”.

The company in a BSE filing wrote, “We regret to mention that these reports are blatantly erroneous and is done to deliberately mislead the investing community. This is causing irreparable loss of economic value to the investors at large and reputation of the group. Given the seriousness of the article and its consequential adverse impact on minority investors, we requested Registrar and Transfer Agent, with respect to the status of the Demat Account of the aforesaid funds and have their written confirmation vide its e-mail dated 14th June, 2021, clarifying that the Demat Account in which the aforesaid funds hold the shares of the Company are not frozen.”

Adani Shares open higher on Tuesday after hitting lower circuit on Monday

Shares of Adani group companies --Adani Ports and Special Economic Zone Ltd opened 4.5% higher after a steep drop in the previous session. The company rejected of a media report that said accounts of three foreign investor funds that own Adani Group stocks had been frozen. Shares were last down 0.8%. Adani Power, Adani Transmission and Adani Total Gas fell 5% and were locked in their lower circuits.

Shares of Adani group companies plunged on Monday after reports that the National Securities Depository Ltd (NSDL) froze the accounts of the three foreign funds that are among the top stakeholders in the firms.

Billionaire Gautam Adani's group on Monday said accounts of three Mauritius-based funds that own the port-to-energy conglomerate's stocks were not frozen and any reports suggesting the contrary were "blatantly erroneous and misleading".

With Agency Inputs