Adani Stocks Rout Rattles Confidence In Local Insurer Assets, Says Bain

Embattled tycoon Gautam Adani’s challenges have knocked the confidence of strategic insurance investors seeking to establish partnerships in India, according to Bain & Co.’s mergers and acquisitions head for Asia Pacific.

Global firms, which typically hold significant stakes in the government-regulated sector, are worried about finding strong local partners who they can trust, said Bain’s Harshveer Singh.

“They are now asking ‘Do we know what we are getting into?’” Singh said.

A stock rout has wiped $127 billion off the market value of Adani’s empire after a scathing report by short seller Hindenburg Research on Jan. 24. The Adani Group, which denied the allegations of accounting fraud and stock manipulation, is now focused on conserving cash, repaying debt and retrieving pledged shares as it scrambles to undo the damage.

Still, if bondholders are kept safe and the conglomerate demonstrates it generates enough cash flows, the Adani group could tide over the current stress, Singh said.

Investor confidence in the country remains high among private equity and sovereign wealth funds, in particular those from Southeast Asia and the Middle East, who have already deployed significant capital into investments in the country, Singh said.

Adani, an active dealmaker, announced 40 deals valued at nearly $15 billion in the past year, including renewable energy assets and media companies, according to data compiled by Bloomberg.

Dealmaking in India bucked the global trend as the country saw about $191 billion of deals announced in 2022, the busiest ever, according to data compiled by Bloomberg.