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MSCI to revise Adani Group weightings after free float review

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Global index provider MSCI plans to change the weighting of Adani Group shares after reviewing the number of freely tradable shares, a further setback for the Indian conglomerate reeling from fraud allegations.

MSCI said ‘certain investors’ Adani Group After receiving feedback from “various market participants”, “should not be designated as free float according to our methodology”.

A reduction in the determined float of the Adani Group’s listing would reduce the weighting of these stocks in MSCI’s carefully monitored indices, causing outflows as benchmark-tracking investors reduce their holdings. will be

MSCI We define the free float of a company’s stock as the percentage that international investors can buy on the open market.

Gautam Adani’s vast airport-to-energy empire is under intense pressure, Lost more than $100 billion in market capitalization After short-selling Hindenburg Research accused his group of fraud and stock manipulation.

wipeout Prompted a margin call from the lenderBarclays, Citigroup and Deutsche Bank, France’s TotalEnergies in a $1.1 billion equity-backed loan Suspends planned $4 billion hydrogen project with a group.

MSCI said it would make changes to its stock float and related market capitalization calculations when it released its February index review on Thursday.

Adani Group shares are included in several of MSCI’s equity benchmarks including the Indian, Asian, Emerging Markets and Global Equity Indexes.

Rival index provider FTSE Russell said last month that Adani index constituents included in its benchmarks “continue to be eligible according to the underlying index methodology.”

Adani Group’s publicly traded shares were put up for sale following the announcement, with its flagship Adani Enterprises down 15% after two straight days of gains.

An Asian equity strategist at a Wall Street investment bank said MSCI is likely to cut its float estimate by about half, following the precedent set by previous reviews of various companies.

“As a result, the weight of Adani shares in the index could be halved, and passive investors would have to sell to reduce it. [the stocks’] Strategists added that they expect this to result in outflows of around $1 billion to $1.5 billion.

These outflows will add pressure to the company’s Mumbai-listed shares, which are a component of MSCI’s India, Asia, Emerging Markets and Global Equity Benchmarks.

The Adani Group did not respond to a request for comment.

Hindenberg’s brief report found that the Indian business empire was using funds based offshore in Mauritius to hide the true extent of the Adani family’s ownership of the group’s listed companies, and to control the amount of shares that insiders could own. It claims to have circumvented the rules governing

Hindenburg founder Nathan Anderson said on Twitter following the MSCI announcement:

Adani Group, whose stocks including Adani Enterprises and Adani Ports account for more than 3% of MSCI’s India index, denies the allegations.

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