Adani’s 413-Page Hindenburg Reply Aims to Calm Before Share Sale
Adani’s 413-Page Hindenburg Reply Aims to Calm Before Share Sale
P R Sanjai and Sidhartha Shukla
Sun, January 29, 2023
(Bloomberg) -- Gautam Adani published a 413-page rebuttal of allegations of fraud by short seller Hindenburg Research, seeking to calm potential investors before the Indian billionaire’s flagship completes a $2.5 billion share sale.
Some 65 of the 88 questions have been addressed in Adani’s public disclosures and the conduct of the American short seller “is nothing short of a calculated securities fraud under applicable law,” Adani Group said in a statement Sunday. It reiterated it will “exercise our rights to pursue remedies to safeguard our stakeholders before all appropriate authorities.”
The lengthy response comes in the last leg of the follow on offer by Adani Enterprises Ltd., which received overall subscriptions of 1% on Friday. While investors in Indian public offerings typically wait until the last day of the sale to place bids, there were concerns that Hindenburg’s attack on the country’s richest man would sour sentiment.
“This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,” Adani said in its response.
Hindenburg had published a 100-page report on the eve of Adani’s share sale opening, alleging that its two-year investigation found “brazen stock manipulation and accounting fraud.” It also called out the conglomerate’s “substantial debt.” The firm, which said it has taken a short position in Adani’s companies through US-traded bonds and non-Indian-traded derivatives, declined to share details of the trade when reached by Bloomberg News.
Adani’s 413-Page Hindenburg Reply Aims to Calm Before Share Sale
P R Sanjai and Sidhartha Shukla
Sun, January 29, 2023
(Bloomberg) -- Gautam Adani published a 413-page rebuttal of allegations of fraud by short seller Hindenburg Research, seeking to calm potential investors before the Indian billionaire’s flagship completes a $2.5 billion share sale.
Some 65 of the 88 questions have been addressed in Adani’s public disclosures and the conduct of the American short seller “is nothing short of a calculated securities fraud under applicable law,” Adani Group said in a statement Sunday. It reiterated it will “exercise our rights to pursue remedies to safeguard our stakeholders before all appropriate authorities.”
The lengthy response comes in the last leg of the follow on offer by Adani Enterprises Ltd., which received overall subscriptions of 1% on Friday. While investors in Indian public offerings typically wait until the last day of the sale to place bids, there were concerns that Hindenburg’s attack on the country’s richest man would sour sentiment.
“This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,” Adani said in its response.
Hindenburg had published a 100-page report on the eve of Adani’s share sale opening, alleging that its two-year investigation found “brazen stock manipulation and accounting fraud.” It also called out the conglomerate’s “substantial debt.” The firm, which said it has taken a short position in Adani’s companies through US-traded bonds and non-Indian-traded derivatives, declined to share details of the trade when reached by Bloomberg News.
Who Is Gautam Adani and What Is Hindenburg Research?
Analysis by Sankalp Phartiyal | Bloomberg
January 29, 2023
Allegations of stock manipulation and accounting fraud from New York-based investor Hindenburg Research against Adani Group are piling pressure on the Indian conglomerate and its 60-year-old founder. Gautam Adani became Asia’s richest man last year and was second only to Elon Musk in the world at one point. Unlike Musk, Adani is relatively unknown outside his home country. Here’s some background.
1. Who is Gautam Adani? What’s his net worth?
Adani was born to a small textile merchant family in 1962 in the western industrial state of Gujarat. He dropped out of university and began his career sorting diamonds for a firm in the financial hub of Mumbai. He later imported materials used in manufactured goods and by the mid-1990s was managing the Mundra Port, which he now owns. While his net worth took a beating in the days after Hindenburg’s report was published on Jan. 24, he was still in the top 10 on the Bloomberg Billionaires Index as of late January.
2. How does Adani make money?
Adani Group today comprises half a dozen major companies with interests ranging from energy to transportation and infrastructure development. It’s India’s largest port operator and manages some of the country’s biggest airports. Adani Enterprises, the group’s listed trading house, reported $9.3 billion in sales in the year through March 31, 2022.
3. What are Adani’s companies?
Adani Green Energy Ltd. (Renewable power generation)
Adani Enterprises Ltd. - (Coal mining and trading)
Adani Transmission Ltd. (Power transmission)
Adani Total Gas Ltd. (Gas distribution)
Adani Power Ltd. (Coal-fired power generation)
The Adani Group also runs a real estate business, a shadow banking firm named Adani Capital and an edible oil and food business via a venture with Singapore-based Wilmar International Ltd.
4. What are Adani’s political connections?
The tycoon is seen as closer to Prime Minister Narendra Modi, who also hails from Gujarat state, than any other Indian billionaire. Adani’s corporate strategy has run in parallel with Modi’s efforts to develop India’s $3.2 trillion economy. When Modi promised to bring reliable electricity to more Indians, Adani doubled down on coal-fired power production. The alignment extends to foreign affairs. In 2021, Adani began construction of a major port facility in Sri Lanka. Officials from both countries said the plan was encouraged by the Modi government, which wants to curb Chinese influence in the island nation. Whether building expressways or upgrading data centers, Adani can be counted on to provide money, infrastructure, or expertise, whatever the policy priority.
5. Why did shares in Adani Group companies fall?
They quickly lost roughly $50 billion in market value after Hindenburg Research, founded by short-seller Nathan Anderson, issued a 100-page report containing wide-ranging allegations of stock manipulation and accounting fraud that it said dated back decades. The Adani Group dismissed the report as “maliciously mischievous” and said it’s exploring legal action as well as preparing a detailed rebuttal.
6. What is Hindenburg Research?
Anderson’s firm — technically a research and trading outfit, not a hedge fund with outside investors — is less than five years old and wagers its own money in the markets. Even in Manhattan’s financial circles, Anderson is hardly a big name. The closely held firm specializes in forensic financial research, according to its website. It first attracted Wall Street’s attention in 2020 for raising serious questions about electric-vehicle makers Nikola Corp. and Lordstown Motors Corp.
India's Adani hits back at Hindenburg, says it made all disclosures
The logo of the Adani Group is seen on the facade of its Corporate House on the outskirts of Ahmedabad
Sun, January 29, 2023
By Aditya Kalra, Aditi Shah and Jayshree P Upadhyay
NEW DELHI (Reuters) -India's Adani Group issued a detailed response on Sunday to a Hindenburg Research report that sparked a $48 billion rout in its stocks, saying it complies with all local laws and had made necessary regulatory disclosures.
The conglomerate led by Asia's richest man, the Indian billionaire Gautam Adani, said last week's Hindenburg report was intended to enable the U.S.-based short seller to book gains, without citing evidence.
For 60-year-old Adani, the stock market meltdown has been a dramatic setback for a school-dropout who rose swiftly in recent years to become the world's third richest man, before slipping last week to rank seventh on the Forbes rich list.
Adani Group's response comes as its flagship company is pushing ahead with a $2.5 billion share sale. This has been overshadowed by the Hindenburg report, which flagged concerns about high debt levels and the use of tax havens.
"All transactions entered into by us with entities who qualify as ‘related parties’ under Indian laws and accounting standards have been duly disclosed by us," Adani said in 413-page response issued late on Sunday.
"This is rife with conflict of interest and intended only to create a false market in securities to enable Hindenburg, an admitted short seller, to book massive financial gain through wrongful means at the cost of countless investors," it added.
Hindenburg did not immediately respond to a request for comment on the Adani response on Sunday.
Hindenburg's report questioned how the Adani Group has used offshore entities in tax havens such as Mauritius and the Caribbean islands, adding that certain offshore funds and shell companies "surreptitiously" own stock in Adani's listed firms.
Adani said on Thursday that it is considering taking action against Hindenburg, which responded on the same day by saying it would welcome such a move.
The report also said five of seven key listed Adani companies have reported current ratios - a measure of liquid assets minus near-term liabilities - of below 1.
This, the short-seller said, suggested "a heightened short-term liquidity risk".
It also said key listed Adani companies had "substantial debt" which has put the entire group on a "precarious financial footing" and that shares in seven Adani listed companies have an 85% downside on a fundamental basis due to what it called "sky-high valuations".
Defending its practice on pledging shares of its promoters - or key shareholders - the Adani Group in its response said that raising financing against shares as collateral was a common practice globally and loans are given by large institutions and banks on the back of thorough credit analysis.
The group added there is a robust disclosure system in place in India wherein listed companies need to disclose their overall pledge position of shares to stock exchanges from time to time.
It said that its promoter pledge positions across portfolio companies had dropped from more than 50% in March 2020 in some listed stocks, to less than 20% in December 2022.
(Reporting by Aditya Kalra, Aditi Shah, Jayshree Upadhyay and Anirudh Saligrama in Bengaluru; Editing by Kevin Liffey and Alexander Smith)
Adani publishes 413-page response to accusations as he suffers $28b wipeout
ByAnders Melin, P R Sanjai and Sidhartha Shukla
January 30, 2023
Indian billionaire Gautam Adani’s group published a 413-page rebuttal to allegations of fraud by short seller Hindenburg Research that has erased billions from the value of his flagship firm.
Some 65 of the 88 questions have been addressed in Adani’s public disclosures and the conduct of the American short seller “is nothing short of a calculated securities fraud under applicable law,” Adani Group said in a statement. It reiterated it would “exercise our rights to pursue remedies to safeguard our stakeholders before all appropriate authorities.” Adani is seeking to calm investors before the conglomerate completes a crucial $US2.5 billion ($3.5 billion) share sale.
Adani lost more than $US20 billion of wealth on Friday as shares in his group’s various entities tumbled.
Adani said the short-seller report was “a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India”.
Analysis by Sankalp Phartiyal | Bloomberg
January 29, 2023
Allegations of stock manipulation and accounting fraud from New York-based investor Hindenburg Research against Adani Group are piling pressure on the Indian conglomerate and its 60-year-old founder. Gautam Adani became Asia’s richest man last year and was second only to Elon Musk in the world at one point. Unlike Musk, Adani is relatively unknown outside his home country. Here’s some background.
1. Who is Gautam Adani? What’s his net worth?
Adani was born to a small textile merchant family in 1962 in the western industrial state of Gujarat. He dropped out of university and began his career sorting diamonds for a firm in the financial hub of Mumbai. He later imported materials used in manufactured goods and by the mid-1990s was managing the Mundra Port, which he now owns. While his net worth took a beating in the days after Hindenburg’s report was published on Jan. 24, he was still in the top 10 on the Bloomberg Billionaires Index as of late January.
2. How does Adani make money?
Adani Group today comprises half a dozen major companies with interests ranging from energy to transportation and infrastructure development. It’s India’s largest port operator and manages some of the country’s biggest airports. Adani Enterprises, the group’s listed trading house, reported $9.3 billion in sales in the year through March 31, 2022.
3. What are Adani’s companies?
Adani Green Energy Ltd. (Renewable power generation)
Adani Enterprises Ltd. - (Coal mining and trading)
Adani Transmission Ltd. (Power transmission)
Adani Total Gas Ltd. (Gas distribution)
Adani Power Ltd. (Coal-fired power generation)
The Adani Group also runs a real estate business, a shadow banking firm named Adani Capital and an edible oil and food business via a venture with Singapore-based Wilmar International Ltd.
4. What are Adani’s political connections?
The tycoon is seen as closer to Prime Minister Narendra Modi, who also hails from Gujarat state, than any other Indian billionaire. Adani’s corporate strategy has run in parallel with Modi’s efforts to develop India’s $3.2 trillion economy. When Modi promised to bring reliable electricity to more Indians, Adani doubled down on coal-fired power production. The alignment extends to foreign affairs. In 2021, Adani began construction of a major port facility in Sri Lanka. Officials from both countries said the plan was encouraged by the Modi government, which wants to curb Chinese influence in the island nation. Whether building expressways or upgrading data centers, Adani can be counted on to provide money, infrastructure, or expertise, whatever the policy priority.
5. Why did shares in Adani Group companies fall?
They quickly lost roughly $50 billion in market value after Hindenburg Research, founded by short-seller Nathan Anderson, issued a 100-page report containing wide-ranging allegations of stock manipulation and accounting fraud that it said dated back decades. The Adani Group dismissed the report as “maliciously mischievous” and said it’s exploring legal action as well as preparing a detailed rebuttal.
6. What is Hindenburg Research?
Anderson’s firm — technically a research and trading outfit, not a hedge fund with outside investors — is less than five years old and wagers its own money in the markets. Even in Manhattan’s financial circles, Anderson is hardly a big name. The closely held firm specializes in forensic financial research, according to its website. It first attracted Wall Street’s attention in 2020 for raising serious questions about electric-vehicle makers Nikola Corp. and Lordstown Motors Corp.
Who is behind Hindenburg, the research firm targeting the Adani group?
Mimansa Verma
Fri, January 27, 2023
Hindenburg Research’s bruising report accusing the Adani Group of pulling off “the largest con in corporate history” has rattled India’s stock markets.
On Jan. 24, the New York-based forensic financial research firm disclosed its short positions on Adani companies, on the grounds of alleged accounting fraud and “brazen stock manipulation” over the course of decades. This has sent shares of the company spiraling down into a deep red zone in the past two days. So far, its seven listed entities have lost $39.4 billion of value.
Hindenburg Research has a track record of exposing corporate wrongdoings, including those of electric-truck maker Nikola Corporation, and of betting wisely on short and long investments, as it did with Twitter during the social media company’s long takeover drama with Elon Musk.
Hindenburg’s latest report, 106 pages in all, seeks answers to 88 questions related to discrepancies at Adani that it says it found across two years. The group’s chief, Indian industrialist Gautam Adani, is Asia’s richest man, with a net worth of roughly $120 billion.
The conglomerate’s legal head, Jatin Jalundhwala, in a statement on Jan. 26, said the company was “deeply disturbed” by the “intentional and reckless” attempt to tarnish Adani’s reputation ahead of a follow-on public offer that opened today (Jan. 27).
The extent of the damage triggered by Hindenburg’s findings is of widespread importance in India, where several public-sector banks and the country’s trust fund Life Insurance Corporation (LIC) hold large stakes in the company. If Adani collapses, it will hurt taxpayers in a big way.
datawrapper-chart-6S98Y
What is Hindenburg Research?
Nathan Anderson founded Hindenburg Research in 2017 to analyze the equity, credit, and derivative markets. The name Hindenburg is derived from the 1937 airship explosion in New Jersey that killed 36 passengers.
The firm says on its website that it looks for “man-made disasters,” such as accounting irregularities, mismanagement, and undisclosed related-party transactions. Its stated aim: to uncover corporate disasters before they “lure in more unsuspecting victims.”
Anderson’s firm has targeted at least 16 companies to date. It employs 10 people, mostly former journalists and analysts, Bloomberg reports.
Who is Hindenburg’s founder?
Anderson, 38, grew up in a small town in Connecticut and earned a degree in international business at the University of Connecticut.
Seeking a “diverse set of experiences,” as he put it to the Financial Times in 2021, he worked as a paramedic while studying abroad in Israel. His career in finance began at financial data company FactSet Research Systems. There, he worked with investment management companies, and found that “the processes across these firms is virtually the same, and not particularly incisive,” as he told the FT.
Stints in capital-raising at the firms Blue Heron Capital and Tangent Capital were Anderson’s first steps toward investigative research. His roles involved studying hedge funds and investment opportunities for high-net-worth individuals, according to his his LinkedIn profile.
His first big win was unearthing fraud at hedge fund Platinum Partners. For this case, Anderson teamed up with another senior financial fraud investigator, his mentor Harry Markopolos, who famously went after Bernard Madoff’s Ponzi scheme.
Why do corporates fear Anderson?
The short-seller is often not welcome in corporate circles,where short bets are commonly viewed as a means to attack companies and stunt their growth.
Short sellers, who profit when a targeted stock declines, have been a part of the market ever since the stocks came into existence. They create an important system of checks and balances in markets prone to froth.
According to Hindenburg’s report, the firm put together its short positions in Adani companies through US-traded bonds and non-Indian-traded derivative instruments. It also underscored the huge debt pile on the Adani books, which Hindenburg says has put the entire group on a “precarious financial footing.”
By the digits
$100 billion: Addition in Gautam Adani’s net worth in the past three years due to a meteoric rise in stock prices
$39.4 billion: Wealth erosion of Adani Group in a span of two trading days
38: The number of shell entities identified by Hindenburg Research that are allegedly controlled by Gautam Adani’s elder brother Vinod Adani or other close associates
$17 billion: The combined amount of alleged money laundering, theft of taxpayer funds, and corruption that was previously investigated by four government agencies that looked into Adani holdings
85%+: The amount of downside Hindenburg sees for Adani-listed firms “purely on fundamentals”
Mimansa Verma
Fri, January 27, 2023
Hindenburg Research’s bruising report accusing the Adani Group of pulling off “the largest con in corporate history” has rattled India’s stock markets.
On Jan. 24, the New York-based forensic financial research firm disclosed its short positions on Adani companies, on the grounds of alleged accounting fraud and “brazen stock manipulation” over the course of decades. This has sent shares of the company spiraling down into a deep red zone in the past two days. So far, its seven listed entities have lost $39.4 billion of value.
Hindenburg Research has a track record of exposing corporate wrongdoings, including those of electric-truck maker Nikola Corporation, and of betting wisely on short and long investments, as it did with Twitter during the social media company’s long takeover drama with Elon Musk.
Hindenburg’s latest report, 106 pages in all, seeks answers to 88 questions related to discrepancies at Adani that it says it found across two years. The group’s chief, Indian industrialist Gautam Adani, is Asia’s richest man, with a net worth of roughly $120 billion.
The conglomerate’s legal head, Jatin Jalundhwala, in a statement on Jan. 26, said the company was “deeply disturbed” by the “intentional and reckless” attempt to tarnish Adani’s reputation ahead of a follow-on public offer that opened today (Jan. 27).
The extent of the damage triggered by Hindenburg’s findings is of widespread importance in India, where several public-sector banks and the country’s trust fund Life Insurance Corporation (LIC) hold large stakes in the company. If Adani collapses, it will hurt taxpayers in a big way.
datawrapper-chart-6S98Y
What is Hindenburg Research?
Nathan Anderson founded Hindenburg Research in 2017 to analyze the equity, credit, and derivative markets. The name Hindenburg is derived from the 1937 airship explosion in New Jersey that killed 36 passengers.
The firm says on its website that it looks for “man-made disasters,” such as accounting irregularities, mismanagement, and undisclosed related-party transactions. Its stated aim: to uncover corporate disasters before they “lure in more unsuspecting victims.”
Anderson’s firm has targeted at least 16 companies to date. It employs 10 people, mostly former journalists and analysts, Bloomberg reports.
Who is Hindenburg’s founder?
Anderson, 38, grew up in a small town in Connecticut and earned a degree in international business at the University of Connecticut.
Seeking a “diverse set of experiences,” as he put it to the Financial Times in 2021, he worked as a paramedic while studying abroad in Israel. His career in finance began at financial data company FactSet Research Systems. There, he worked with investment management companies, and found that “the processes across these firms is virtually the same, and not particularly incisive,” as he told the FT.
Stints in capital-raising at the firms Blue Heron Capital and Tangent Capital were Anderson’s first steps toward investigative research. His roles involved studying hedge funds and investment opportunities for high-net-worth individuals, according to his his LinkedIn profile.
His first big win was unearthing fraud at hedge fund Platinum Partners. For this case, Anderson teamed up with another senior financial fraud investigator, his mentor Harry Markopolos, who famously went after Bernard Madoff’s Ponzi scheme.
Why do corporates fear Anderson?
The short-seller is often not welcome in corporate circles,where short bets are commonly viewed as a means to attack companies and stunt their growth.
Short sellers, who profit when a targeted stock declines, have been a part of the market ever since the stocks came into existence. They create an important system of checks and balances in markets prone to froth.
According to Hindenburg’s report, the firm put together its short positions in Adani companies through US-traded bonds and non-Indian-traded derivative instruments. It also underscored the huge debt pile on the Adani books, which Hindenburg says has put the entire group on a “precarious financial footing.”
By the digits
$100 billion: Addition in Gautam Adani’s net worth in the past three years due to a meteoric rise in stock prices
$39.4 billion: Wealth erosion of Adani Group in a span of two trading days
38: The number of shell entities identified by Hindenburg Research that are allegedly controlled by Gautam Adani’s elder brother Vinod Adani or other close associates
$17 billion: The combined amount of alleged money laundering, theft of taxpayer funds, and corruption that was previously investigated by four government agencies that looked into Adani holdings
85%+: The amount of downside Hindenburg sees for Adani-listed firms “purely on fundamentals”
India's Adani hits back at Hindenburg, says it made all disclosures
The logo of the Adani Group is seen on the facade of its Corporate House on the outskirts of Ahmedabad
Sun, January 29, 2023
By Aditya Kalra, Aditi Shah and Jayshree P Upadhyay
NEW DELHI (Reuters) -India's Adani Group issued a detailed response on Sunday to a Hindenburg Research report that sparked a $48 billion rout in its stocks, saying it complies with all local laws and had made necessary regulatory disclosures.
The conglomerate led by Asia's richest man, the Indian billionaire Gautam Adani, said last week's Hindenburg report was intended to enable the U.S.-based short seller to book gains, without citing evidence.
For 60-year-old Adani, the stock market meltdown has been a dramatic setback for a school-dropout who rose swiftly in recent years to become the world's third richest man, before slipping last week to rank seventh on the Forbes rich list.
Adani Group's response comes as its flagship company is pushing ahead with a $2.5 billion share sale. This has been overshadowed by the Hindenburg report, which flagged concerns about high debt levels and the use of tax havens.
"All transactions entered into by us with entities who qualify as ‘related parties’ under Indian laws and accounting standards have been duly disclosed by us," Adani said in 413-page response issued late on Sunday.
"This is rife with conflict of interest and intended only to create a false market in securities to enable Hindenburg, an admitted short seller, to book massive financial gain through wrongful means at the cost of countless investors," it added.
Hindenburg did not immediately respond to a request for comment on the Adani response on Sunday.
Hindenburg's report questioned how the Adani Group has used offshore entities in tax havens such as Mauritius and the Caribbean islands, adding that certain offshore funds and shell companies "surreptitiously" own stock in Adani's listed firms.
Adani said on Thursday that it is considering taking action against Hindenburg, which responded on the same day by saying it would welcome such a move.
The report also said five of seven key listed Adani companies have reported current ratios - a measure of liquid assets minus near-term liabilities - of below 1.
This, the short-seller said, suggested "a heightened short-term liquidity risk".
It also said key listed Adani companies had "substantial debt" which has put the entire group on a "precarious financial footing" and that shares in seven Adani listed companies have an 85% downside on a fundamental basis due to what it called "sky-high valuations".
Defending its practice on pledging shares of its promoters - or key shareholders - the Adani Group in its response said that raising financing against shares as collateral was a common practice globally and loans are given by large institutions and banks on the back of thorough credit analysis.
The group added there is a robust disclosure system in place in India wherein listed companies need to disclose their overall pledge position of shares to stock exchanges from time to time.
It said that its promoter pledge positions across portfolio companies had dropped from more than 50% in March 2020 in some listed stocks, to less than 20% in December 2022.
(Reporting by Aditya Kalra, Aditi Shah, Jayshree Upadhyay and Anirudh Saligrama in Bengaluru; Editing by Kevin Liffey and Alexander Smith)
Adani publishes 413-page response to accusations as he suffers $28b wipeout
ByAnders Melin, P R Sanjai and Sidhartha Shukla
January 30, 2023
Indian billionaire Gautam Adani’s group published a 413-page rebuttal to allegations of fraud by short seller Hindenburg Research that has erased billions from the value of his flagship firm.
Some 65 of the 88 questions have been addressed in Adani’s public disclosures and the conduct of the American short seller “is nothing short of a calculated securities fraud under applicable law,” Adani Group said in a statement. It reiterated it would “exercise our rights to pursue remedies to safeguard our stakeholders before all appropriate authorities.” Adani is seeking to calm investors before the conglomerate completes a crucial $US2.5 billion ($3.5 billion) share sale.
Adani lost more than $US20 billion of wealth on Friday as shares in his group’s various entities tumbled.
CREDIT:BLOOMBERG
Adani had initially appeared to weather the biggest broadside yet to his sprawling empire after the accusations from Hindenburg last Wednesday, heading into a holiday in India as the world’s fourth-richest person and dismissing a short-seller report as “stale” and “baseless.”
But then Indian markets reopened on Friday and it quickly became apparent that Hindenburg Research, a tiny New York firm, had pierced the defences of the mighty Adani Group, a corporate giant half a world away.
Bonds and shares of the various Adani entities fell. Then fell some more. In the end, units like Adani Green Energy and Adani Total Gas plunged by the daily 20 per cent limit, delivering punishing losses after years of world-beating gains.
RELATED ARTICLE
David vs Goliath: Meet the short seller taking on Adani
In just over six hours of trading in Mumbai, the group lost more than $US50 billion in market value, costing Adani in excess of $US20 billion ($28 billion), or about one-fifth of his total fortune, according to the Bloomberg Billionaires Index. It was his biggest wealth wipeout ever and the steepest market-fuelled drop in history for anyone in Asia since Bloomberg started tracking the fortunes of the world’s richest a decade ago — a shocking blow to a man who in recent years rocketed up the ladder of the world’s super-rich at a seemingly unstoppable pace.
As for Adani himself, even after Friday’s loss — the fourth-largest market-driven drop in the history of the Bloomberg wealth index — the 60-year-old commands a net worth of $US92.7 billion. He’s fallen below Bill Gates and Warren Buffett to the seventh-richest person on the globe.
Sunday’s lengthy rebuttal comes in the last leg of the follow-on offer by Adani, which received overall subscriptions of 1 per cent on Friday. While investors in Indian public offerings typically wait until the last day of the sale to place bids, there were concerns that Hindenburg’s attack on the country’s richest man would sour sentiment.
“This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,” Adani said in its response.
Hindenburg had published a 100-page report on the eve of Adani’s share sale opening, alleging that its two-year investigation found “brazen stock manipulation and accounting fraud.” It also called out the conglomerate’s “substantial debt.” The firm, which said it had taken a short position in Adani’s companies through US-traded bonds and non-Indian-traded derivatives, declined to share details of the trade when reached by Bloomberg News.
Adani had initially appeared to weather the biggest broadside yet to his sprawling empire after the accusations from Hindenburg last Wednesday, heading into a holiday in India as the world’s fourth-richest person and dismissing a short-seller report as “stale” and “baseless.”
But then Indian markets reopened on Friday and it quickly became apparent that Hindenburg Research, a tiny New York firm, had pierced the defences of the mighty Adani Group, a corporate giant half a world away.
Bonds and shares of the various Adani entities fell. Then fell some more. In the end, units like Adani Green Energy and Adani Total Gas plunged by the daily 20 per cent limit, delivering punishing losses after years of world-beating gains.
RELATED ARTICLE
David vs Goliath: Meet the short seller taking on Adani
In just over six hours of trading in Mumbai, the group lost more than $US50 billion in market value, costing Adani in excess of $US20 billion ($28 billion), or about one-fifth of his total fortune, according to the Bloomberg Billionaires Index. It was his biggest wealth wipeout ever and the steepest market-fuelled drop in history for anyone in Asia since Bloomberg started tracking the fortunes of the world’s richest a decade ago — a shocking blow to a man who in recent years rocketed up the ladder of the world’s super-rich at a seemingly unstoppable pace.
As for Adani himself, even after Friday’s loss — the fourth-largest market-driven drop in the history of the Bloomberg wealth index — the 60-year-old commands a net worth of $US92.7 billion. He’s fallen below Bill Gates and Warren Buffett to the seventh-richest person on the globe.
Sunday’s lengthy rebuttal comes in the last leg of the follow-on offer by Adani, which received overall subscriptions of 1 per cent on Friday. While investors in Indian public offerings typically wait until the last day of the sale to place bids, there were concerns that Hindenburg’s attack on the country’s richest man would sour sentiment.
“This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,” Adani said in its response.
Hindenburg had published a 100-page report on the eve of Adani’s share sale opening, alleging that its two-year investigation found “brazen stock manipulation and accounting fraud.” It also called out the conglomerate’s “substantial debt.” The firm, which said it had taken a short position in Adani’s companies through US-traded bonds and non-Indian-traded derivatives, declined to share details of the trade when reached by Bloomberg News.
Adani said the short-seller report was “a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India”.
CREDIT:BLOOMBERG
The dramatic saga has prompted more questions. What’s next? How might this impact the group’s ongoing share sale? How will regulators in India and globally react? But also — perhaps more importantly — it has put a spotlight on how one of India’s most powerful family-built conglomerates is owned, operated and bankrolled.
“The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens,” Adani’s top lawyer said Thursday in a statement, which called out Hindenburg’s missive as mischievous, unresearched and unsubstantiated. Hindenburg, in turn, shot back that Adani has “resorted to bluster and threats.”
Taking on Adani
Adani Group is the biggest target yet for Nathan Anderson, the man behind Hindenburg who earned Wall Street’s attention with takedowns of electric-vehicle makers Nikola and Lordstown Motors Corp. It’s a sprawling web of businesses that includes port and airport operators, coal mining and trading, natural gas, media and cement, with its expansion plans closely aligned to the development and economic goals of Indian Prime Minister Narendra Modi.
The battle has sharply divided global investors. Many Indian analysts say the group won’t face a severe domestic fallout because its fortunes and strategy are tied to Modi’s. Others see Adani Group’s rebuttal as insufficient, with billionaire Bill Ackman likening it to the response he got from Herbalife, which he said on Twitter “remains a pyramid scheme.”
Hindenburg alleged in a report on Wednesday that its two-year investigation found the Adani Group “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.” It called out the conglomerate’s “substantial debt,” which includes pledging shares for loans; that several of its key leaders are Adani family members; that Gautam’s brother Vinod “manages a vast labyrinth of offshore shell entities” that move billions into Adani companies without required disclosure; and that its auditor “hardly seems capable of complex audit work.”
RELATED ARTICLE
Opinion
Corporate ethics
Australia’s involvement in ‘the largest con in corporate history’
Elizabeth Knight
Business columnist
The firm said it’s shorting Adani Group through US traded bonds and non-Indian-traded derivatives, and that its report “relates solely to the valuation of securities traded outside of India.” It said it “would welcome” legal action in the US.
The more pressing concern is the $US2.5 billion share sale by his flagship firm, Adani Enterprises, which is meant to fund capital expenditures and to pay down the debt of its various units.
The transaction, India’s biggest ever primary follow-on public offering, is meant to draw in a mix of institutions, retail investors and high-net-worth individuals. It had already attracted anchor investors including Abu Dhabi Investment Authority, State Bank Of India Employees Pension Fund and Life Insurance Corp. of India before the Hindenburg report.
Adani Enterprises ended Friday 11 per cent below the floor price of the share sale, which closes on January 31.
The dramatic saga has prompted more questions. What’s next? How might this impact the group’s ongoing share sale? How will regulators in India and globally react? But also — perhaps more importantly — it has put a spotlight on how one of India’s most powerful family-built conglomerates is owned, operated and bankrolled.
“The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens,” Adani’s top lawyer said Thursday in a statement, which called out Hindenburg’s missive as mischievous, unresearched and unsubstantiated. Hindenburg, in turn, shot back that Adani has “resorted to bluster and threats.”
Taking on Adani
Adani Group is the biggest target yet for Nathan Anderson, the man behind Hindenburg who earned Wall Street’s attention with takedowns of electric-vehicle makers Nikola and Lordstown Motors Corp. It’s a sprawling web of businesses that includes port and airport operators, coal mining and trading, natural gas, media and cement, with its expansion plans closely aligned to the development and economic goals of Indian Prime Minister Narendra Modi.
The battle has sharply divided global investors. Many Indian analysts say the group won’t face a severe domestic fallout because its fortunes and strategy are tied to Modi’s. Others see Adani Group’s rebuttal as insufficient, with billionaire Bill Ackman likening it to the response he got from Herbalife, which he said on Twitter “remains a pyramid scheme.”
Hindenburg alleged in a report on Wednesday that its two-year investigation found the Adani Group “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.” It called out the conglomerate’s “substantial debt,” which includes pledging shares for loans; that several of its key leaders are Adani family members; that Gautam’s brother Vinod “manages a vast labyrinth of offshore shell entities” that move billions into Adani companies without required disclosure; and that its auditor “hardly seems capable of complex audit work.”
RELATED ARTICLE
Opinion
Corporate ethics
Australia’s involvement in ‘the largest con in corporate history’
Elizabeth Knight
Business columnist
The firm said it’s shorting Adani Group through US traded bonds and non-Indian-traded derivatives, and that its report “relates solely to the valuation of securities traded outside of India.” It said it “would welcome” legal action in the US.
The more pressing concern is the $US2.5 billion share sale by his flagship firm, Adani Enterprises, which is meant to fund capital expenditures and to pay down the debt of its various units.
The transaction, India’s biggest ever primary follow-on public offering, is meant to draw in a mix of institutions, retail investors and high-net-worth individuals. It had already attracted anchor investors including Abu Dhabi Investment Authority, State Bank Of India Employees Pension Fund and Life Insurance Corp. of India before the Hindenburg report.
Adani Enterprises ended Friday 11 per cent below the floor price of the share sale, which closes on January 31.
