Business Tycoon Gautam Adani’s firms to raise up to $5 billion

Three of the billionaire Gautam Adani’s companies are considering fundraising that could bring in up to $5 billion. Less than four months after a damning short-seller report sent the conglomerate into crisis, this is an important test of investor confidence in Adani’s empire.

The people, who asked to remain anonymous because the information is private, said that Adani Enterprises Ltd., the company’s flagship, as well as Adani Green Energy Ltd. and Adani Transmission Ltd., may raise between $3 billion and $5 billion for a war chest to support the businesses. According to exchange filings, the boards of the three companies will meet on Saturday to discuss raising money through the sale of shares or other securities. They didn’t say how much money they planned to raise or who they were collaborating with on potential transactions. Stocks of the Adani Group, which increased on Thursday, were largely down in early Friday trading in Mumbai after MSCI Inc. announced it would drop two companies from its India gauge.

In order for management to quickly take advantage of opportunities, fundraising plans are typically approved by the boards of the companies. The companies may not announce the amount they intend to raise after the Saturday board meetings because negotiations are still in progress, according to the people. The Adani Group’s representative declined to comment on the specifics of the fundraising.

Any attempt by the companies of the tycoon to raise money from a larger pool of investors could backfire if the market is unconvinced that the cloud over the stocks has lifted or believes the prices are still too high. The broadside sparked a weeks-long stock rout that destroyed more than $100 billion in market value, forcing the billionaire to cancel a $2.4 billion share sale by his flagship firm priced at pre-attack levels despite the coal-to-cement conglomerate denying fraud allegations made by Hindenburg Research in January.

Two Adani Group companies, Adani Transmission and Adani Total Gas Ltd., will be removed from MSCI’s India gauge at the end of May, according to the global index provider. On Friday, both stocks decreased by as much as 5%. In Mumbai, Adani Enterprises was trading 0.6% lower after giving up its early gains.