Adani: Accused of Pulling the 'Largest Con in Corporate History'
Adani Group is a diversified organization in India comprising 7 publicly traded companies owned by Gautam Adani. As of January 2023, with a net worth of $129.3 billion according to Forbes and $121 billion according to Bloomberg, Adani is the richest person in Asia and the third richest person in the world. Established in 1988, the group’s market cap stood at $ 260 billion in late 2022.
Hindenburg Research, which in the past has shorted—or bet against—companies like electric truck maker Nikola Corp and Twitter, said it holds short positions in Adani companies through U.S.-traded bonds and non-Indian-traded derivative instruments. Hindenburg Research published a report on 24 January 2023 accusing the company of engaging in “brazen stock manipulation and accounting fraud scheme over the course of decades.”
They also found evidence that the group’s key listed companies fell in value by 85% despite “sky-high valuations.” Moreover, substantial debt puts the group on “precarious financial footing.” The report made a series of scathing accusations including the alleged use of offshore shell companies for “stock manipulation” and “laundering money” through Adani Group’s private companies, onto the books of listed firms “in order to maintain the appearance of financial health and solvency.” The report coincided with Adani's upcoming $2.5 billion secondary share sale on 27 January 2023.
The Adani Group has vehemently denied the accusations labeling them as “a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts.” Adani Group did not address specific allegations in its official statement but said it has always been in compliance with the law.
How did it impact Adani?
Shares in Adani Transmission (ADAI.NS) fell 9%, Adani Ports and Special Economic Zone (APSE.NS) slipped 6.3% and Adani Enterprises ended down 1.5%. Collectively, the seven listed group companies lost $10.73 billion in market capitalization.
Source: Refinitiv Data
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January (Wk4) 2023 Newsletter