Adani tries to win back investors

This is an audio transcript of the FT News Briefing podcast episode: ‘Adani tries to win back investors’

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, May 23rd, and this is your FT News Briefing.

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China and the US are duking it out over computer chips, but China may be more worried about Japan. Meanwhile, Ireland just hit Meta with a record fine. And India’s Adani Group is trying to come back from a damaging report from Hindenburg. I’m Marc Filippino, and here’s the news you need to start your day.

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Washington and Beijing are in a tit-for-tat battle over computer chip sales. But Chinese executives tell the FT they’re more worried about what Tokyo is doing. Japan says that starting in July, it plans to restrict exports of nearly two dozen types of crucial chipmaking equipment. Chinese semiconductor executives say those restrictions could hurt even more than US regulations. They risk hitting production of widely used lower-grade silicon.

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European regulators yesterday slapped Facebook’s parent company Meta with a record breaking fine. Meta has its European headquarters in the Irish capital of Dublin. So Irish regulators issued the €1.2bn fine for privacy violations. The watchdog also ordered Meta to stop transferring European user data to the US. Here’s our EU correspondent Javier Espinoza.

Javier Espinoza
So essentially, the Irish privacy watchdog is arguing that the company was illegally saving the data of EU citizens on its servers in the US. And why does that matter? Because they argue that they didn’t have enough safeguards to protect this data from being accessed by the intelligence services in the US.

Marc Filippino
So Javier, this fine coming from Ireland’s Data Protection Commission kind of struck me because Ireland has really enjoyed the benefits from having these global tech companies there. It kind of felt like biting the hand that feeds, you know?

Javier Espinoza
Yeah, this is also a welcome paradox because on the one hand, Ireland is both the watchdog when it comes to privacy, but at the same time, it is the headquarters of large, Big Tech companies that are generating a lot of jobs for people. Nearly all the cases that are presented to the Irish regulator have been dismissed or people think that these fines have not been as big, and it hasn’t really changed anything. And so not only privacy activists but also other member states in the EU have said that Ireland is not as aggressive as it should be because it’s very important to hold Big Tech to account when it comes to handling key essential data that affect just everyday life.

Marc Filippino
So do you think this is a turning point for Irish regulators? I mean, do you think they’re gonna get more aggressive from this point?

Javier Espinoza
I think the jury’s still out. I think that in their defence, what they would say if they were here is that it takes time, that it’s all very new, that it’s a new industry, that they are doing what they can. I remain sceptical of whether this is a turning point, just merely because it’s a very complicated system. You know, even this big fine is likely to get appealed. It’s likely to go over many, many, many years. So despite grabbing the headlines, I think it is not yet clear whether we will see, you know, in the coming months lots of fines that are record breaking and that we will see Ireland really biting when it comes to protecting the privacy rights of EU citizens.

Marc Filippino
That’s the FT’s EU correspondent Javier Espinoza.

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India’s leading stock index was up yesterday, fuelled by a surge in Adani stocks. Adani is the powerful Indian conglomerate, and its shares were absolutely hammered earlier this year. Investors bailed after a New York investment firm called Hindenburg accused the group of stock price manipulation and fraud. Now, Indian authorities are looking into the allegations. And on Friday, it was reported that India’s market regulator had hit a wall in its Adani probe.

Chloe Cornish
That report was enough to massively boost the share prices of the Adani Group companies this week.

Marc Filippino
That’s our Mumbai reporter Chloe Cornish.

Chloe Cornish
Because it seemed to really intimate that there wasn’t going to be any serious regulatory action taken against the group because it was just too difficult for the regulator to complete some of its investigative work. Having said that, the main report, one that the market will probably be most focused on, that’s the one that will come out in August.

Marc Filippino
Meanwhile, Chloe reports that Adani executives are trying to build back confidence with creditors. Founder Gautam Adani has invited bankers on a three-day trip next month so they can tour his conglomerate’s prized assets.

Chloe Cornish
Adani have been known in the past for doing quite extravagant trips and visits, partially because its best-selling point is its assets. So Adani runs really important infrastructure in India, like the Mumbai International Airport, for example, and it is now building another airport. So it’s gonna be showing bankers how well that construction is coming along and that will reassure them that this company is building real facilities that will generate real money at some point in the future. So the idea is to fill these financiers with good feelings about what their money has paid for and make sure that they understand that all of that money that they’ve ploughed in is gonna be generating returns at some point in the near future.

Marc Filippino
Another casualty of the Hindenburg report was a big Adani share sale. The group’s flagship company had hoped to raise billions of dollars, but the sale had to be cancelled because of the damning report. Now, Chloe says, Adani companies are trying again.

Chloe Cornish
So two companies in the Adani Group portfolio have said they want to raise money in share issues. We have to see whether they’ll be able to pull that off, but it’s a similar amount of money. It’s around $2.5bn that these two companies collectively have said they’d like to raise. And the follow-on share sale that was tanked earlier this year was for about $2.4bn, although it was for a different company in the Adani portfolio. So this will be a big test as to whether or not Adani’s able to raise funds in the way that they were prior to the Hindenburg report.

Marc Filippino
Chloe Cornish is the FT’s Mumbai reporter.

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Before we go, TikTok is suing the US state of Montana. Legislators in that western state recently passed a law banning TikTok because of national security concerns. TikTok complained that the ban violates its first amendment rights. And yesterday, the Chinese-owned social media company went ahead and filed a lawsuit against Montana’s attorney-general.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.