TotalEnergies, the French-headquartered energy giant, has told investors it has a “limited” $3.1 billion exposure to Indian conglomerate Adani Group, becoming the first western company to outline its exposure to the company which has shed billions of dollars in market capitalization. In a statement posted on its website Friday, the multinational oil giant outlined the extent of its exposure to the struggling Adani Group, which has to date, lost more than $110 billion in market value since short seller Hindenburg Research alleged fraud at the Adani-linked companies.
TotalEnergies
TTE,
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TTE,
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said it has a 50% stake in Adani Total Private Limited, owns 37.4% of Adani Total Gas Ltd.
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has a 20% minority interest in Adani Green Energy
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and a 50% stake in solar assets owned by AGEL23, for $2.5 billion. AGEL23 is a jointly owned venture between the French energy giant and Adani Green Energy from 2020 to expand solar power generation in India. The Paris-listed firm was trading over 1% up on Friday, reversing a four-day losing streak. “TotalEnergies’ exposure resulting from these stakes is limited, as it represents 2.4% ($3.1 billion at December 31, 2022) of the Company’s capital employed and only $180 million of net operating income in 2022,” the company said. TotalEnergies said it had invested in the Adani firms in full compliance with Indian law and its own internal governance processes. Read: Adani Group market cap losses reach $105 billion after share sale cancellation from flagship company The firm welcomed Adani’s announcement that it will mandate one of the “big four” accounting firms to carry out a general audit. “These investments being accounted for under the equity method, TotalEnergies has not performed any re-evaluation in its accounts of its stakes in the listed entities Adani Total Gas and Adani Green Energy in relation to the increase in their stock values,” it added. Elsewhere, contagion concerns to the Adani fallout are “widening”, but are still limited to the financial institutions, according to John Hardy, Head of FX Strategy at Saxo Bank. “Challenges for the group continue to mount since the Hindenburg report, with a shock withdrawal of share sales, some banks refusing to take Adani securities as collaterals and then the Reserve Bank of India asking Indian banks for details of the exposure to Adani Group,” Hardy said. The iShares MSCI India ETF
INDA,
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has dropped 4% this year, at a time when most major markets have gained ground. Credit Suisse
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+1.38%
stopped margin lending on Adani bonds, Bloomberg reported on Wednesday. Bloomberg reported that at least 200 firms have held exposure to Adani Group’s U.S.-currency notes – around $8 billion in dollar bonds. One of the largest holdings is said to be BlackRock, holding $104 million of Adani’s U.S. currency notes. S&P Dow Jones Indices said that it will remove Adani Enterprises from its sustainability indices effective from Feb. 7, after a “media & stakeholder analysis triggered by allegations of stock manipulation and accounting fraud,” it said in a one line announcement.