MSCI reviews free float status of some Adani Group securities

Financial index provider MSCI on Thursday said that it is reviewing the free float status of some Adani Group securities after market participants flagged concerns over eligibility of some of the group firms' securities for its indexes.

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.

In a statement, the index provider said that it 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.

"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.

"This determination has triggered a free float review of the Adani Group securities," it added.

It will implement the resultant free float changes and associated market capitalisation determinations in connection with the February 2023 Index Review.

In addition, as part of the February index review, MSCI will suspend any potential changes to the number of shares for the affected securities.

At present, there are eight Adani group and associate companies which are part of MSCI Standard Index.

"Further, until otherwise announced, MSCI will review the treatment of non-neutral corporate events for the affected securities on a case-by-case basis and potentially defer their implementation.

"The treatment of any such non-neutral corporate event would be announced to all clients with advance notice through regular index announcements," MSCI said.

For the avoidance of doubt, MSCI will continue implementing any neutral corporate events including ones requiring application of a Price Adjustment Factor (PAF).

All the affected securities will be further reviewed as part of the scheduled Full Country Float Review during the May 2023 index review.

MSCI said it will continue to monitor publicly available information that may impact the eligibility of the relevant securities or estimates of their free float.

After recovering for two straight sessions, shares of Adani Group companies resumed their slide on Thursday, with flagship Adani Enterprises slumping nearly 11 per cent as index provider MSCI Inc decided to review the weightage of the conglomerate's stocks in its indices.

Shares of nine of the 10 group firms closed in the red on the BSE even as the benchmark Sensex rose more than 142 points.

Shares of the group companies have taken a beating on the bourses after the US-based short-seller Hindenburg Research came out with an adverse report about the Adani Group on January 24.

Hindenburg, which specialises in activist short-selling, made allegations of market manipulation and accounting fraud against Adani Group, which was strongly denied by the conglomerate.