CRIMINAL CAPITALI$M
One of Wall Street’s most feared short-selling research firms just accused Asia’s richest man of a multibillion-dollar fraud
Chloe Taylor
Wed, January 25, 2023
Asia’s wealthiest person saw his fortune take a hit on Wednesday, after a famed U.S. short seller accused him of “pulling the largest con in corporate history.”
In a report published on Tuesday, Hindenburg Research said Adani Group and its founder Gautam Adani – one of the richest people in the world – had engaged in “a brazen stock manipulation and accounting fraud scheme over the course of decades.”
Adani serves as the Indian conglomerate’s chairman.
Hindenburg Research has a history of shining a light on corporate malpractice, successfully predicting the demise or exposing the shortcomings of several companies, including Nikola, Riot Blockchain and China Metal Resources Utilization.
It announced on Tuesday that it had concluded a two-year investigation into Adani Group, which involved speaking with dozens of insiders, including former senior executives, as well as reviewing thousands of documents and carrying out “diligence site visits” in several countries.
‘Precarious financial footing’
Adani Group’s aggressive expansion efforts have seen it rack up massive debts.
The firm’s financial problems have been widely reported on, but Hindenburg warned that the company’s use of its “inflated stock” as loan collateral was “putting the entire group on precarious financial footing.”
However, the problems with Adani Group’s finances were much deeper than its stock being overpriced, Hindenburg said.
Through its wide-reaching investigations, Hindenburg said it had uncovered a “vast labyrinth of offshore shell entities” being managed by Adani’s older brother, Vinod.
Thirty-eight of those shell companies were in Mauritius, the report claimed, with others discovered in Cyprus, the UAE, Singapore and the Caribbean.
“The shells seem to serve several functions, including stock parking/stock manipulation and laundering money through Adani’s private companies onto the listed companies’ balance sheets in order to maintain the appearance of financial health and solvency,” Hindenburg’s report said. “This offshore shell network also seems to be used for earnings manipulation.”
One offshore fund had allocated around $3 billion almost exclusively to shares of Adani Group companies, Hindenburg’s report also claimed.
A former trader at the fund reportedly said it was obvious the Adanis controlled those shares, but that the fund had been “intentionally structured to conceal their ultimate beneficial ownership.”
In India, shares of publicly listed companies that are held by those involved with establishing or controlling the business must be disclosed by law.
The rules also dictate that listed firms have at least 25% of their shares held by “non-promoters” in order to mitigate manipulation and insider trading.
“Four of Adani’s listed companies are on the brink of the delisting threshold due to high promoter ownership,” the report alleged.
“Our research indicates that offshore shells and funds tied to the Adani Group comprise many of the largest ‘public’ (i.e., non-promoter) holders of Adani stock, an issue that would subject the Adani companies to delisting, were the Indian securities regulator’s rules enforced.”
As well as using offshore shell companies to hold stock, Hindenburg’s researchers also detailed how the family was using them to send money to their publicly traded firms.
“The funds then seem to be used to engineer Adani’s accounting (whether by bolstering its reported profit or cash flows), cushioning its capital balances in order to make listed entities appear more creditworthy, or simply moved back out to other parts of the Adani empire where capital is needed,” they said.
They noted that Adani’s personal fortune had been boosted over the past three years by Adani Group stock price appreciation, with its seven core firms seeing an average price rise of 819% over that period.
However, they argued that these elevated prices – and thus Adani’s net worth – could not be sustained.
“Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its seven key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations,” they said in Tuesday’s report.
‘Baseless allegations’
Representatives for the Adani Group did not respond to Fortune’s request for comment on Hindenburg’s investigation.
However, the organization publicly refuted the allegations on Wednesday, arguing that they had been made in an attempt to sabotage the success of Adani Enterprises’ upcoming Follow-on Public Offer (FPO), which is expected to go live on Friday, Jan. 27.
Last year, Adani Group announced it would inject more shares of Adani Enterprises – one of its public divisions – into the market after its stock price surged more than 3,300% in three years.
Since debuting on the stock market in the 1990s, shares of Adani Enterprises have seen their value rise by more than 50,000%.
On Wednesday, it was reported that the company’s $2.45 billion secondary share offering – India’s largest-ever FPO – was oversubscribed by anchor investors.
Initial bids included offers from the Abu Dhabi Investment Authority, Citigroup and Morgan Stanley, according to news agency Reuters.
“The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts,” the company’s CFO Jugeshinder Singh said in a statement on Wednesday.
“The Group has always been in compliance with all laws, regardless of jurisdiction, and maintains the highest standards of corporate governance,” he insisted.
“Our informed and knowledgeable investors are not influenced by one-sided, motivated and unsubstantiated reports with vested interests.”
Despite Singh’s assertion that “the investor community has always reposed faith in the Adani Group,” Hindenburg’s report triggered a massive sell-off of the corporation’s listed businesses on Wednesday.
On average, the group’s listed firms saw more than 5% wiped off of their value during Mumbai’s trading session on Wednesday, according to the Financial Times – amounting to a $10.8 billion hit on the companies’ combined market caps.
The retreat from the company’s stock also had wider implications for Indian businesses, generating a ripple effect that saw Indian shares as a whole take a downward turn.
What does Adani Group do?
Headquartered in Ahmedabad, Adani Group is an Indian corporation comprised of seven publicly traded companies.
It has interests in energy, infrastructure, agriculture and transport.
The company, founded by Gautam Adani in 1988, employs more than 23,000 people.
Who is Gautam Adani?
As his company’s stock nosedived on Wednesday, Adani personally lost almost $1 billion – or 0.8% – of his fortune, according to Bloomberg’s Billionaires Index, which ranks Adani as the fourth wealthiest person in the world.
Forbes’s list of the world’s richest people, which uses a slightly different methodology, puts Adani in third place – above Amazon founder Jeff Bezos.
Last year, Adani briefly held the title of the World’s Second Richest Person, as his fortune continued to climb while sinking U.S. tech stocks bit into the wealth of Bezos and other billionaires whose fortunes were tied to the success of Big Tech.
Bloomberg reported at the time that Adani’s fortune had risen more than anyone else’s in 2022.
Regardless of his position among the top five wealthiest people on earth, the self-made tycoon – who describes his company’s operations as “nation building” – is firmly the richest person in Asia, with a net worth of around $119 billion.
However, Adani’s phenomenal rise in wealth and power hasn’t been without controversy.
In the past, Adani’s close relationship with Indian Prime Minister Narendra Modi has led to allegations that his success has arisen from “brazen cronyism.”
The 60-year-old mogul controls India’s biggest port, Mundra Port, and acquired a 74% stake in Mumbai International Airport in 2020, according to Forbes, making him India’s biggest airport operator.
He also holds stakes in other airports around the country, after scooping up all six airports that were approved for privatization by the Indian government in 2018 after officials relaxed the rules about which companies were permitted to operate them.
Since 2020, his personal fortune has skyrocketed by more than 1,200%, data from Forbes shows.
This story was originally featured on Fortune.com
Chloe Taylor
Wed, January 25, 2023
Asia’s wealthiest person saw his fortune take a hit on Wednesday, after a famed U.S. short seller accused him of “pulling the largest con in corporate history.”
In a report published on Tuesday, Hindenburg Research said Adani Group and its founder Gautam Adani – one of the richest people in the world – had engaged in “a brazen stock manipulation and accounting fraud scheme over the course of decades.”
Adani serves as the Indian conglomerate’s chairman.
Hindenburg Research has a history of shining a light on corporate malpractice, successfully predicting the demise or exposing the shortcomings of several companies, including Nikola, Riot Blockchain and China Metal Resources Utilization.
It announced on Tuesday that it had concluded a two-year investigation into Adani Group, which involved speaking with dozens of insiders, including former senior executives, as well as reviewing thousands of documents and carrying out “diligence site visits” in several countries.
‘Precarious financial footing’
Adani Group’s aggressive expansion efforts have seen it rack up massive debts.
The firm’s financial problems have been widely reported on, but Hindenburg warned that the company’s use of its “inflated stock” as loan collateral was “putting the entire group on precarious financial footing.”
However, the problems with Adani Group’s finances were much deeper than its stock being overpriced, Hindenburg said.
Through its wide-reaching investigations, Hindenburg said it had uncovered a “vast labyrinth of offshore shell entities” being managed by Adani’s older brother, Vinod.
Thirty-eight of those shell companies were in Mauritius, the report claimed, with others discovered in Cyprus, the UAE, Singapore and the Caribbean.
“The shells seem to serve several functions, including stock parking/stock manipulation and laundering money through Adani’s private companies onto the listed companies’ balance sheets in order to maintain the appearance of financial health and solvency,” Hindenburg’s report said. “This offshore shell network also seems to be used for earnings manipulation.”
One offshore fund had allocated around $3 billion almost exclusively to shares of Adani Group companies, Hindenburg’s report also claimed.
A former trader at the fund reportedly said it was obvious the Adanis controlled those shares, but that the fund had been “intentionally structured to conceal their ultimate beneficial ownership.”
In India, shares of publicly listed companies that are held by those involved with establishing or controlling the business must be disclosed by law.
The rules also dictate that listed firms have at least 25% of their shares held by “non-promoters” in order to mitigate manipulation and insider trading.
“Four of Adani’s listed companies are on the brink of the delisting threshold due to high promoter ownership,” the report alleged.
“Our research indicates that offshore shells and funds tied to the Adani Group comprise many of the largest ‘public’ (i.e., non-promoter) holders of Adani stock, an issue that would subject the Adani companies to delisting, were the Indian securities regulator’s rules enforced.”
As well as using offshore shell companies to hold stock, Hindenburg’s researchers also detailed how the family was using them to send money to their publicly traded firms.
“The funds then seem to be used to engineer Adani’s accounting (whether by bolstering its reported profit or cash flows), cushioning its capital balances in order to make listed entities appear more creditworthy, or simply moved back out to other parts of the Adani empire where capital is needed,” they said.
They noted that Adani’s personal fortune had been boosted over the past three years by Adani Group stock price appreciation, with its seven core firms seeing an average price rise of 819% over that period.
However, they argued that these elevated prices – and thus Adani’s net worth – could not be sustained.
“Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its seven key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations,” they said in Tuesday’s report.
‘Baseless allegations’
Representatives for the Adani Group did not respond to Fortune’s request for comment on Hindenburg’s investigation.
However, the organization publicly refuted the allegations on Wednesday, arguing that they had been made in an attempt to sabotage the success of Adani Enterprises’ upcoming Follow-on Public Offer (FPO), which is expected to go live on Friday, Jan. 27.
Last year, Adani Group announced it would inject more shares of Adani Enterprises – one of its public divisions – into the market after its stock price surged more than 3,300% in three years.
Since debuting on the stock market in the 1990s, shares of Adani Enterprises have seen their value rise by more than 50,000%.
On Wednesday, it was reported that the company’s $2.45 billion secondary share offering – India’s largest-ever FPO – was oversubscribed by anchor investors.
Initial bids included offers from the Abu Dhabi Investment Authority, Citigroup and Morgan Stanley, according to news agency Reuters.
“The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts,” the company’s CFO Jugeshinder Singh said in a statement on Wednesday.
“The Group has always been in compliance with all laws, regardless of jurisdiction, and maintains the highest standards of corporate governance,” he insisted.
“Our informed and knowledgeable investors are not influenced by one-sided, motivated and unsubstantiated reports with vested interests.”
Despite Singh’s assertion that “the investor community has always reposed faith in the Adani Group,” Hindenburg’s report triggered a massive sell-off of the corporation’s listed businesses on Wednesday.
On average, the group’s listed firms saw more than 5% wiped off of their value during Mumbai’s trading session on Wednesday, according to the Financial Times – amounting to a $10.8 billion hit on the companies’ combined market caps.
The retreat from the company’s stock also had wider implications for Indian businesses, generating a ripple effect that saw Indian shares as a whole take a downward turn.
What does Adani Group do?
Headquartered in Ahmedabad, Adani Group is an Indian corporation comprised of seven publicly traded companies.
It has interests in energy, infrastructure, agriculture and transport.
The company, founded by Gautam Adani in 1988, employs more than 23,000 people.
Who is Gautam Adani?
As his company’s stock nosedived on Wednesday, Adani personally lost almost $1 billion – or 0.8% – of his fortune, according to Bloomberg’s Billionaires Index, which ranks Adani as the fourth wealthiest person in the world.
Forbes’s list of the world’s richest people, which uses a slightly different methodology, puts Adani in third place – above Amazon founder Jeff Bezos.
Last year, Adani briefly held the title of the World’s Second Richest Person, as his fortune continued to climb while sinking U.S. tech stocks bit into the wealth of Bezos and other billionaires whose fortunes were tied to the success of Big Tech.
Bloomberg reported at the time that Adani’s fortune had risen more than anyone else’s in 2022.
Regardless of his position among the top five wealthiest people on earth, the self-made tycoon – who describes his company’s operations as “nation building” – is firmly the richest person in Asia, with a net worth of around $119 billion.
However, Adani’s phenomenal rise in wealth and power hasn’t been without controversy.
In the past, Adani’s close relationship with Indian Prime Minister Narendra Modi has led to allegations that his success has arisen from “brazen cronyism.”
The 60-year-old mogul controls India’s biggest port, Mundra Port, and acquired a 74% stake in Mumbai International Airport in 2020, according to Forbes, making him India’s biggest airport operator.
He also holds stakes in other airports around the country, after scooping up all six airports that were approved for privatization by the Indian government in 2018 after officials relaxed the rules about which companies were permitted to operate them.
Since 2020, his personal fortune has skyrocketed by more than 1,200%, data from Forbes shows.
This story was originally featured on Fortune.com
Story by India Today Web Desk • 2h ago
Shares of seven listed Adani Group companies fell sharply between 1-9 per cent after a report by US-based investor research and activist short-seller firm, Hindenburg Research, led to panic among domestic investors.
Adani Group shares fall after Hindenburg report. What we know so far© Provided by India Today
Adani Group listed companies such as Adani Total Gas, Adani Enterprises, Adani Transmission, Adani Green Energy, Adani Ports, Adani Power and Adani Wilmar fell sharply and led to a cumulative market cap erosion of nearly Rs 1 lakh crore at the end of today's trading session.
In fact, shares of cement manufacturing firms Ambuja Cements and ACC – two companies acquired by Adani Group last year – also fell 6-7 per cent amid the broader selloff in Adani Group listed companies.
What did the Hindenburg report say?
The report by Hindenburg Research, released on January 24, 2023, suggested that Adani Group was "engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades".
Revealing the findings of its "two-year investigations", Hindenburg said companies under the Gautam Adani-owned conglomerate "have taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing".
The report also said that Adani Group's seven key listed companies have an "85 per cent downside purely on a fundamental basis owing to sky-high valuations". In addition, the report also levelled allegations of fraud and stock manipulation against the group.
The report triggered massive panic in domestic stock markets, with listed Adani Group companies falling sharply. This also led to a nearly 1 per cent drop in benchmark equity indices Sensex and Nifty.
How Adani Group responded?
Related video: Hindenburg Research Short Position Triggers Adani Selloff (Bloomberg)Duration 2:16
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5:04
Adani Group released an official statement to rubbish allegations levelled by Hindenburg Research in its report. The group also questioned the timing of the report, released days before the Adani Enterprises FPO.
Adani Group CFO Jugeshinder Singh said, "We are shocked that Hindenburg Research published a report on January 24, 2023, without making any attempt to contact us or verify the factual matrix."
"The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India's highest courts," he said.
"The timing of the report's publication clearly betrays a brazen, mala fide intention to undermine the Adani Group's reputation with the principal objective of damaging the upcoming Follow-on Public Offering from Adani Enterprises, the biggest FPO ever in India," Singh added.
"Our informed, and knowledgeable investors are not influenced by one-sided, motivated and unsubstantiated reports with vested interests."
How analysts reacted to the Hindenburg report?
Analysts quoted in several media reports have questioned the timing of the report as many of the facts mentioned by Hindenburg report are already in the public domain and have not been proven.
"The timing of the report is suspicious," said Kranthi Bathini, Director, Equity Strategy, WealthMills, in an interview to Business Today TV.
"They (Hindenburg) could've brought this report under public domain months earlier. This timing is suspicious and as Adani Group's statement says they have mentioned that all these are malicious rumours about the group, and they stick to their corporate governance," Bathini said.
He also explained the reason behind the panic selling witnessed in Adani Group listed companies today and said, "As investors are aware, all the Adani Group shares are high beta stocks and their valuations always look strange. So, whenever these kinds of allegations surface, the stocks tumble."
However, he assured investors that there is no reason to panic and added that "existing investors can hold their positions and have nothing to worry about". He also reiterated that the allegations made in the report have not been proven to date.
Asia’s richest man slams short-seller’s fraud claims as ‘baseless’ and ‘malicious’
By Diksha Madhok, CNN
Published 8:18 AM EST, Wed January 25, 2023
Chairperson of Indian conglomerate Adani Group, Gautam Adani, speaks at the World Congress of Accountants in Mumbai on November 19, 2022.Indranil Mukherjee/AFP/Getty Images
New DelhiCNN —
India’s Adani Group on Wednesday denounced allegations of fraud made by US-based short seller Hindenburg Research as “baseless” and a “malicious combination of selective misinformation.”
Hindenburg Research published an investigation on billionaire Gautam Adani’s sprawling conglomerate on Tuesday, accusing it of “brazen stock manipulation and accounting fraud scheme over the course of decades.”
Hindenburg said it has taken a short position in companies in the Adani Group “through U.S.-traded bonds and non-Indian-traded derivative instruments.” Short sellers aim to make money by betting that the stock price of the companies they target will fall.
Adani’s business empire contains seven listed companies — in sectors ranging from ports to power stations — and shares in most of them fell by between 3% and more than 8% on Wednesday.
In its investigation, which Hindenburg said took two years to compile, the research firm questioned the “sky-high valuations” of Adani firms and said their “substantial debt” puts the entire group “on a precarious financial footing.”
The research firm concluded its report with 88 questions for the Adani Group. These range from asking for details on Adani’s offshore entities, to why it has “such a convoluted, interlinked corporate structure.”
CNN has not verified the claims in the report, and India’s stock market regulator did not immediately respond to a request for comment.
Shares of Adani’s companies have surged in the last few years, making him Asia’s richest man.
In a statement released a few hours after Hindenburg published its report, the Adani Group’s chief financial officer Jugeshinder Singh said that Hindenburg did not make “any attempt to contact us or verify the factual matrix,” adding that the allegations made by the short seller are “stale, baseless and discredited.”
The conglomerate has faced scrutiny from Indian authorities in the past. In 2021, shares in Adani’s companies tumbled after The Economic Times newspaper said that foreign funds that hold stakes worth billions of dollars were frozen by the country’s National Securities Depository. The Adani Group called that report “blatantly erroneous.”
Nate Anderson, who founded Hindenburg Research, has made a name for himself in the past few years by targeting companies that he thinks are overvalued and have suspect financials. Anderson is best known for going after electric truck company Nikola in 2020, calling it an “intricate fraud,” and causing the firm’s stock to plunge sharply. In 2022, Nikola’s founder was convicted by a US jury of fraud in a case alleging he lied to investors about the company’s technology.
But some have accused Hindenburg of trying to push stocks lower with its research reports in order to make a profit.
Its report on the Adani Group comes at a sensitive time. Later this week, Adani Enterprises, the conglomerate’s flagship company, is aiming to raise 200 billion rupees ($2.5 billion) by issuing new shares.
Singh said that the “timing of the report’s publication clearly betrays a brazen, mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming follow-on public offering.”
The conglomerate is also considering taking five new businesses to the stock market in the next two to five years.
A college dropout and a self-made industrialist, Adani is worth nearly $120 billion, making him the world’s fourth richest man, ahead of Bill Gates and Warren Buffet, according to Bloomberg’s Billionaires Index. He is also seen as a close ally of India’s current prime minister, Narendra Modi.
But this is not the first time analysts have expressed fear that the rapid expansion of his business comes with a huge risk. Adani’s juggernaut has been fueled by a $30 billion borrowing binge, making his business one of the most indebted in the country.
Last year, CreditSights, a research firm owned by Fitch Group, published a report about Adani Group titled “Deeply Overleveraged” in which it expressed strong concerns about its debt-funded growth plans.
Adani Group responded to CreditSights with a 15-page report, saying that the “leverage ratios” of its companies “continue to be healthy and are in line with the industry benchmarks in the respective sectors” and that they “have consistently de-levered” in the last nine years.
By Diksha Madhok, CNN
Published 8:18 AM EST, Wed January 25, 2023
Chairperson of Indian conglomerate Adani Group, Gautam Adani, speaks at the World Congress of Accountants in Mumbai on November 19, 2022.Indranil Mukherjee/AFP/Getty Images
New DelhiCNN —
India’s Adani Group on Wednesday denounced allegations of fraud made by US-based short seller Hindenburg Research as “baseless” and a “malicious combination of selective misinformation.”
Hindenburg Research published an investigation on billionaire Gautam Adani’s sprawling conglomerate on Tuesday, accusing it of “brazen stock manipulation and accounting fraud scheme over the course of decades.”
Hindenburg said it has taken a short position in companies in the Adani Group “through U.S.-traded bonds and non-Indian-traded derivative instruments.” Short sellers aim to make money by betting that the stock price of the companies they target will fall.
Adani’s business empire contains seven listed companies — in sectors ranging from ports to power stations — and shares in most of them fell by between 3% and more than 8% on Wednesday.
In its investigation, which Hindenburg said took two years to compile, the research firm questioned the “sky-high valuations” of Adani firms and said their “substantial debt” puts the entire group “on a precarious financial footing.”
The research firm concluded its report with 88 questions for the Adani Group. These range from asking for details on Adani’s offshore entities, to why it has “such a convoluted, interlinked corporate structure.”
CNN has not verified the claims in the report, and India’s stock market regulator did not immediately respond to a request for comment.
Shares of Adani’s companies have surged in the last few years, making him Asia’s richest man.
In a statement released a few hours after Hindenburg published its report, the Adani Group’s chief financial officer Jugeshinder Singh said that Hindenburg did not make “any attempt to contact us or verify the factual matrix,” adding that the allegations made by the short seller are “stale, baseless and discredited.”
The conglomerate has faced scrutiny from Indian authorities in the past. In 2021, shares in Adani’s companies tumbled after The Economic Times newspaper said that foreign funds that hold stakes worth billions of dollars were frozen by the country’s National Securities Depository. The Adani Group called that report “blatantly erroneous.”
Nate Anderson, who founded Hindenburg Research, has made a name for himself in the past few years by targeting companies that he thinks are overvalued and have suspect financials. Anderson is best known for going after electric truck company Nikola in 2020, calling it an “intricate fraud,” and causing the firm’s stock to plunge sharply. In 2022, Nikola’s founder was convicted by a US jury of fraud in a case alleging he lied to investors about the company’s technology.
But some have accused Hindenburg of trying to push stocks lower with its research reports in order to make a profit.
Its report on the Adani Group comes at a sensitive time. Later this week, Adani Enterprises, the conglomerate’s flagship company, is aiming to raise 200 billion rupees ($2.5 billion) by issuing new shares.
Singh said that the “timing of the report’s publication clearly betrays a brazen, mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming follow-on public offering.”
The conglomerate is also considering taking five new businesses to the stock market in the next two to five years.
A college dropout and a self-made industrialist, Adani is worth nearly $120 billion, making him the world’s fourth richest man, ahead of Bill Gates and Warren Buffet, according to Bloomberg’s Billionaires Index. He is also seen as a close ally of India’s current prime minister, Narendra Modi.
But this is not the first time analysts have expressed fear that the rapid expansion of his business comes with a huge risk. Adani’s juggernaut has been fueled by a $30 billion borrowing binge, making his business one of the most indebted in the country.
Last year, CreditSights, a research firm owned by Fitch Group, published a report about Adani Group titled “Deeply Overleveraged” in which it expressed strong concerns about its debt-funded growth plans.
Adani Group responded to CreditSights with a 15-page report, saying that the “leverage ratios” of its companies “continue to be healthy and are in line with the industry benchmarks in the respective sectors” and that they “have consistently de-levered” in the last nine years.
Adani stocks fall in India on fraud, stock manipulation claims
Nivrita GANGULY
Wed, 25 January 2023
Asia's richest man Gautam Adani saw his net worth drop six billion dollars on Wednesday after a US investment firm accused him of "brazen stock manipulation and accounting fraud".
Adani, 60, is the world's third-richest person, with an estimated fortune of around $120 billion and interests ranging from Australian coal mines to India's busiest ports.
But the magnate was the biggest loser on Forbes' real-time billionaires list on Wednesday, dropping nearly five percent -- or $6.4 billion -- of his net worth overnight as investors rushed to sell shares in his group of companies.
Hindenburg Research published a report on Tuesday alleging that Adani Group "has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades".
The firm said it had taken a short position in Adani Group companies after a two-year investigation based on interviews with former executives, site visits in multiple countries and document reviews.
Its report claims that Adani's elder brother Vinod "manages a vast labyrinth of offshore shell entities" in tax havens including Mauritius, Cyprus and several Caribbean islands.
Hindenburg said it had identified numerous instances of undisclosed related-party transactions and earnings manipulation "to maintain the appearance of financial health and solvency" of listed Adani companies.
The allegations come ahead of an ambitious $2.5 billion follow-on public offer -- India's biggest-ever -- due to open for bids on Friday and aimed at bolstering the business empire's balance sheet.
"The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations," Adani Group chief financial officer Jugeshinder Singh said in a statement.
Singh added that the report had been deliberately timed to undermine the conglomerate's reputation "with the principal objective of damaging the upcoming follow-on public offering".
- 'Afraid to speak out' -
Adani Group is India's second-largest conglomerate, with the combined market capitalisation of its seven listed companies exceeding $218 billion.
Shares in Adani business units have soared up to 2,000 percent in the past three years, adding more than $100 billion to its founder's net worth and vaulting him up the ranks of the world's richest people.
Critics of the billionaire attribute his meteoric rise to a close association with Hindu nationalist Prime Minister Narendra Modi and support for his policies.
Hindenburg's report said there had been a pattern of "government leniency towards the group" stretching back decades.
"We believe the Adani Group has been able to operate a large, flagrant fraud in broad daylight in large part because investors, journalists, citizens and even politicians have been afraid to speak out for fear of reprisal," the report said.
Shares in flagship Adani Enterprises fell as much as three percent on Wednesday, before recovering to trade 1.41 percent lower in the afternoon.
Other business units fell as much as 6.5 percent over the day's trade.
ng/gle/mca
Nivrita GANGULY
Wed, 25 January 2023
Asia's richest man Gautam Adani saw his net worth drop six billion dollars on Wednesday after a US investment firm accused him of "brazen stock manipulation and accounting fraud".
Adani, 60, is the world's third-richest person, with an estimated fortune of around $120 billion and interests ranging from Australian coal mines to India's busiest ports.
But the magnate was the biggest loser on Forbes' real-time billionaires list on Wednesday, dropping nearly five percent -- or $6.4 billion -- of his net worth overnight as investors rushed to sell shares in his group of companies.
Hindenburg Research published a report on Tuesday alleging that Adani Group "has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades".
The firm said it had taken a short position in Adani Group companies after a two-year investigation based on interviews with former executives, site visits in multiple countries and document reviews.
Its report claims that Adani's elder brother Vinod "manages a vast labyrinth of offshore shell entities" in tax havens including Mauritius, Cyprus and several Caribbean islands.
Hindenburg said it had identified numerous instances of undisclosed related-party transactions and earnings manipulation "to maintain the appearance of financial health and solvency" of listed Adani companies.
The allegations come ahead of an ambitious $2.5 billion follow-on public offer -- India's biggest-ever -- due to open for bids on Friday and aimed at bolstering the business empire's balance sheet.
"The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations," Adani Group chief financial officer Jugeshinder Singh said in a statement.
Singh added that the report had been deliberately timed to undermine the conglomerate's reputation "with the principal objective of damaging the upcoming follow-on public offering".
- 'Afraid to speak out' -
Adani Group is India's second-largest conglomerate, with the combined market capitalisation of its seven listed companies exceeding $218 billion.
Shares in Adani business units have soared up to 2,000 percent in the past three years, adding more than $100 billion to its founder's net worth and vaulting him up the ranks of the world's richest people.
Critics of the billionaire attribute his meteoric rise to a close association with Hindu nationalist Prime Minister Narendra Modi and support for his policies.
Hindenburg's report said there had been a pattern of "government leniency towards the group" stretching back decades.
"We believe the Adani Group has been able to operate a large, flagrant fraud in broad daylight in large part because investors, journalists, citizens and even politicians have been afraid to speak out for fear of reprisal," the report said.
Shares in flagship Adani Enterprises fell as much as three percent on Wednesday, before recovering to trade 1.41 percent lower in the afternoon.
Other business units fell as much as 6.5 percent over the day's trade.
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