New Delhi
CNN
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It owns Adani Group of India. It has condemned the fraud allegations by Hindenburg Research as “baseless” and a “malicious combination of misinformation” and is considering legal action against the US-based short seller.
Hindenburg Research on Tuesday published an investigation into billionaire Gautam Adani’s sprawling conglomerate, accusing it of “decades of massive stock manipulation and accounting fraud.”
Hindenburg said it has taken short positions in companies within the Adani Group “in US-traded bonds and non-Indian traded derivatives”. Short sellers seek to make money by betting that their target companies’ stock prices will decline.
Adani’s business empire includes seven listed companies – in sectors ranging from ports to power plants – and his stake in most of them fell by 3% and more than 8% on Wednesday.
The attack immediately took a toll on the billionaire’s fortune. Adani lost nearly $6 billion on Wednesday, according to the Bloomberg Billionaires Index. It is currently worth 113 billion dollars. Indian markets are closed on Thursday.
The probe, which Hindenburg said took two years to compile, questioned the “sky-high valuation” of Adani’s companies and said the “significant debt” put the entire group on a “perilous financial footing”.
The research firm has completed its report for Adani Group with 88 questions. These ranged from asking for details on Adani’s offshore entities to why it has “such a convoluted, convoluted corporate structure”.
CNN did not confirm the claims in the report and India’s stock market regulator did not immediately respond to a request for comment.
Shares of Adani Companies have soared in the past few years, making him Asia’s richest man.
In a statement released hours after Hindenburg published the report, Adani Group Chief Financial Officer Jugeshinder Singh Hindenburg said Hindenburg “made no attempt to contact us or verify the true matrix,” calling the short seller’s allegations “outdated, baseless and unacceptable.”
The Congress has faced scrutiny from Indian authorities in the past. In the year In 2021, shares of Adani companies fell after The Economic Times reported that billions of dollars worth of foreign funds were frozen by the country’s National Securities Depository. Adani’s group called the report “clearly wrong”.
Nate Anderson, who founded Hindenburg Research, has made a name for himself over the past few years by attacking overvalued and financially dubious companies. Andersen is known for going after electric truck company Nicola in 2020, calling it a “sophisticated fraud” and causing the company’s stock to plummet. In the year In 2022, Nikola’s founder was indicted by a US jury for fraud after allegedly lying to investors about the company’s technology.
But some have accused Hindenburg of trying to drive stocks lower with his research reports in order to make a profit.
The report on Adani Group is coming In an emotional moment. Later this week, Adani Enterprises, the conglomerate’s parent company, plans to raise 200 billion rupees ($2.5 billion) by issuing new shares.
“The timing of the report’s publication shows a bold and honest intention to tarnish the reputation of the Adani Group with the main objective of harming its future public offering,” Singh said.
It’s the congometer. Looking to take five new businesses to the stock market in the next two to five years.
In another statement on Thursday, the Adani group said it is “evaluating the relevant provisions of US and Indian laws for corrective and punitive action against Hindenburg Research.”
He added that the Hindenburg report was “deeply concerned” about the impact on the group, its shareholders and investors., and “due to the undue distress caused to the citizens of India”.
A college dropout and self-made industrialist, Adani is the world’s fourth-richest person, ahead of Bill Gates and Warren Buffett, according to the Bloomberg Billionaires Index. He is also seen as a close ally of the current Prime Minister of India, Narendra Modi.
The 60-year-old tycoon founded the Adani Group 30 years ago. It has now established businesses in industries ranging from logistics to mining, and is growing exponentially in sectors as diverse as media, data centers, airports and cement.
But this is not the first time analysts have expressed fears that the rapid expansion of his business comes with significant risks. Adani’s juggernaut has been fueled by $30 billion in borrowed funds, making the business one of the most indebted in the country.
Last year, Fitch Group-owned Creditsights, in a report on Adani Group titled “deeply overvalued”, expressed serious concerns over its debt-backed growth plans.
Adani Group responded to Creditsights in a 15-page report, saying the companies’ “leverage ratios” remain healthy and are in line with industry benchmarks in their respective sectors” and have been “resolved consistently”. In the last nine years.
