MSCI to review free float of Adani Group stocks

Index provider MSCI on Thursday said that it is reviewing free float of Adani Group securities after market participants raised concerns about their eligibility for the MSCI Global Investable Market Indexes.

"Following our 27 January 2023 announcement regarding the Adani Group, MSCI has received feedback from a range of market participants concerning the eligibility and free float determination of specific securities associated with the Adani Group for the MSCI Global Investable Market Indexes (GIMI)," says the index provider.

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 says that certain Adani Group investors should no longer be designated as free float. "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," the index operator says, adding that this determination has triggered a free float review of the Adani Group securities.

These changes are scheduled to be announced later today as part of MSCI's February review. Currently, Adani Enterprises, Adani Ports, Adani Total Gas, Adani Green, Adani Transmission, Adani Power, Ambuja Cements and ACC are part of the MSCI India Index.

"As part of the February Index Review MSCI will suspend any potential changes to the Number of Shares (NOS) for the affected securities," says the index provider. "All the affected securities will be further reviewed as part of the scheduled Full Country Float Review during the May 2023 Index Review. MSCI will continue to monitor publicly available information that may impact the eligibility of the relevant securities for the GIMI or estimates of their free float," it adds.

This comes over two weeks after New York-based short seller Hindenburg Research accused the Adani group of "stock manipulation".

Last week, the National Stock Exchange (NSE) put three Adani Group companies — Adani Enterprises, Adani Ports and Ambuja Cements — under the short-term additional surveillance measure (ASM) framework. The ASM mechanism gets automatically triggered under certain conditions of price volatility in any stock.

On February 7, S&P Dow Jones Indices removed the Gautam Adani-led conglomerate’s flagship company, Adani Enterprises, from its sustainability indices. On February 1, Adani Enterprises called off its fully subscribed follow-on public offer (FPO) owing to recent market volatility and to protect investors from any potential financial losses.