MSCI delays index weighting changes for two Adani companies

By Scott Murdoch and Rodrigo Campos

(Reuters) -Index provider MSCI said on Wednesday it will postpone implementation of updates to weightings for two of India's Adani Group companies, Adani Total Gas and Adani Transmission, to the May benchmark review.

The reversal of the updates to Adani Total Gas and Adani Transmission in the February index review will be reflected in the MSCI Index Product files starting from Feb. 16, MSCI said.

MSCI will also apply a special treatment for all Adani Group's associated securities in the MSCI Equity Indexes starting February.

Shares of Adani Total Gas have lost over 70% since a critical report by U.S. short-seller Hindenburg Research on Jan. 24. The stock turned briefly positive in early trade on Thursday, before slipping to close down 5%.

Adani Transmission shares also settled nearly 5% lower after initially climbing 5%.

Adani Group did not immediately respond to a request for comment outside normal Indian business hours.

MSCI said last week it would cut the weightings of four Adani Group companies, including flagship firm Adani Enterprises, in its indexes after reassessing the number of shares that are freely traded.

The new index weightings were due to come into effect on March 1, but the proposed changes to Adani Total Gas and Adani Transmission will be delayed until May.

MSCI said "potential replicability issues" are behind the decision. Its methodology calls for indexes to be replicated "in an actual portfolio in a cost efficient matter".

MSCI did not immediately respond to a Reuters request for comment on why the changes were reversed shortly after being announced last week.

The changes to the weightings of Adani Enterprises and ACC, a major Indian cement company the Adani Group acquired from Holcim last year, are still due to go ahead.

MSCI examined the size of companies' free floats, having determined there was "sufficient uncertainty" surrounding some investors in Adani companies.

The MSCI decision came after Hindenburg accused the Indian conglomerate of improper use of offshore tax havens and stock manipulation. The group has denied any wrongdoing.

The Hindenburg report has plunged Adani, led by billionaire Gautam Adani, into crisis, wiping some $120 billion off the value of the group's companies.

Adani and two of its main units caught up in the short-selling storm in recent weeks are to hold calls with bond investors on Feb. 16 and Feb. 21, according to a document seen by Reuters.

Meanwhile, Standard Chartered's chief executive said investors should "not be concerned" about any exposure to the conglomerate. Adani made reference to the lender when it touted relationships with global financiers in a lengthy rebuttal of the short-seller's claims.

Singapore's DBS Group previously said it has a tightly managed exposure to Adani, while Indian lenders to the group have said their exposure is comfortable.

(Reporting by Scott Murdoch in Sydney, Rodrigo Campos in New York and Mrinmay Dey and Chris Thomas in Bengaluru; Editing by David Gregorio, Sam Holmes and Shounak Dasgupta)