New Delhi
DailyExpertNews
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India’s Adani Group on Wednesday denounced allegations of fraud by US-based short seller Hindenburg Research as “baseless” and a “malicious combination of selective disinformation”.
Hindenburg Research on Tuesday published an investigation into billionaire Gautam Adani’s sprawling conglomerate, accusing it of “brutal stock manipulation and accounting fraud over decades.”
Hindenburg said it has taken a short position in companies in the Adani Group “through US-traded bonds and non-Indian-traded derivatives.” Short sellers try to make money by betting that the stock price of the companies they target will fall.
Adani’s business empire includes seven publicly traded companies – in industries ranging from ports to power plants – and shares of most fell between 3% and more than 8% on Wednesday.
The plunge had an immediate impact on the billionaire’s net worth. According to Bloomberg’s Billionaires Index, Adani lost nearly $6 billion on Wednesday. He is currently worth $113 billion.
In its research, which Hindenburg said took two years to put together, the research firm questioned the “skyrocketing valuations” of Adani companies, saying their “significant 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 about Adani’s offshore entities to why it has “such a complicated, interconnected corporate structure”.
DailyExpertNews did not verify the claims in the report, and India’s stock exchange regulator did not immediately respond to a request for comment.
The shares of Adani’s companies have soared in recent years, making him the richest man in Asia.
In a statement released a few hours after Hindenburg released his report, Adani Group chief financial officer Jugeshinder Singh said Hindenburg “made no attempt whatsoever to contact us or verify the actual matrix” , adding that the allegations are from the short seller. “old, groundless and discredited.”
The conglomerate has been under scrutiny by Indian authorities in the past. In 2021, shares of Adani’s companies plummeted after The Economic Times newspaper said foreign funds with interests worth billions of dollars were frozen by the country’s National Securities Depository. The Adani Group called that report “blatantly wrong.”
Nate Anderson, who founded Hindenburg Research, has made a name for himself in recent years by targeting companies he believes are overvalued and have suspicious financial positions. Anderson is best known for going after electric truck company Nikola in 2020, calling it a “complicated fraud” and causing the company’s stock to plummet sharply. In 2022, the founder of Nikola was convicted by a US jury of fraud in a case where he alleged that he had lied to investors about the company’s technology.
But some have accused Hindenburg of using his investigative reports to push stocks down to make a profit.
The report on the Adani Group is coming at a sensitive time. Later this week, Adani Enterprises, the conglomerate’s flagship company, aims to raise 200 billion rupees ($2.5 billion) by issuing new shares.
Singh said the “timing of the report’s release clearly betrays a brazen, malicious intent to undermine the reputation of the Adani Group with the primary aim of harming its upcoming public offering.”
The conglomerate is also plans to list five new companies over the next two to five years.
According to Bloomberg’s Billionaires Index, Adani, a high school dropout and self-made industrialist, is the fourth richest man in the world, ahead of Bill Gates and Warren Buffet. He is also seen as a close ally of India’s current Prime Minister Narendra Modi.
The 60-year-old magnate founded the Adani group more than 30 years ago. It now has businesses established in industries ranging from logistics to mining, and is growing aggressively in diverse industries such as media, data centers, airports and cement.
But this isn’t the first time analysts have feared his company’s rapid expansion poses a huge risk. Adani’s juggernaut has been fueled by a $30 billion loan, making his company one of the most indebted in the country.
Last year, CreditSights, a research firm owned by Fitch Group, released a report on Adani Group titled “Deeply Overleveraged” in which it expressed deep concerns about its debt-funded growth plans.
Adani Group responded to CreditSights with a 15-page report, stating that its companies’ “leverage ratios” remain “healthy and in line with industry benchmarks across the respective industries” and that they have “consistently de-levered” over the past nine years.