Hindenburg Research, the short seller that rose to prominence by going after unprofitable blank-check firms and crypto companies, is pursuing its biggest targets yet: the Indian conglomerate Adani Group and its billionaire founder, Gautam Adani, whom Forbes ranks as the world’s third-richest person. Now as per Forbes magazine report has slid to 11th position due to fall in its worth. Hindenburg issued a lengthy report which claims that Adani pulled off “the largest con in corporate history.” Hindenburg accused Adani Group of “a brazen stock manipulation and accounting fraud scheme” run over decades, partly through the use of a maze of shell companies. The firm noted that Adani Group had been investigated for corruption, money laundering and theft of taxpayer funds. (And for good measure, it said that seven Adani Group publicly traded companies were vastly overvalued, based on their financials. Hindenburg said it was shorting Adani Group companies — that is, betting their stock prices will fall — through U.S.-traded bonds and non-Indian-traded derivative instruments. Adani Enterprises, the group’s flagship public firm, shares fell sharply on Wednesday, and continuously sliding as did those of Ambuja Cements, which it recently acquired.
The sell-off wiped out $9.4 billion in shareholder value in a single day by now 5.61 lac crores plus has been wiped out even Indian national banks and life insurance corporation too have come under strain because of its financial transactions with Adani Group companies. In a statement, Adani Group called Hindenburg’s conclusions a “malicious combination of selective misinformation” and allegations that had “been tested and rejected by India’s highest courts.” Over four decades, Mr. Adani regarded as the Asia’s wealthiest person has assembled a business empire that runs from industrial companies to airports to solar energy to telecommunications. Partly thanks to landing lucrative government concessions, under prime minister Modi regime Mr. Adani has become a dominant player in developing the country’s infrastructure; his hostile bid to take control of one of the country’s biggest media companies NDTV has heightened worries about his growing power. Mr. Adani has been called “Modi’s Rockefeller.”
Since Modi came to office, Mr. Adani’s wealth has reportedly surged by more than 200 percent. The firm, Hindenburg research founded by Nathan Anderson, was virtually unknown on Wall Street until 2020, when it raised evidence of fraud at Nikola, the once high-flying electric vehicle maker. That report became a central plank in federal prosecutors’ ultimately successful fraud case against the company’s founder, Trevor Milton. Gautam Adani Lost 36 Billion dollars in Days. Gautam Adani is facing perhaps his biggest challenge yet as a small U.S. investment firm accuses his Indian conglomerate of fraud and stock manipulation.
World’s tycoons adding trillions to their collective fortunes in 2020 and 2021, the world’s richest people were rocked by 12 months of shaky stock markets, war in Europe and rampant inflation have lost 2 trillion dollars last year ending December 2022 . As per magazine Forbes’ estimates, world’s billionaires collective wealth has dropped from $13.8 trillion on New Year’s Day to $11.9 trillion on December 9. The number of billionaires has fallen too, from 2,671 to 2,523. Indian billionaire Gautam Adani, now under scrutiny due to Hindenburg research report the Chairman and founder of the Adani Group made more money than the likes of Tesla’s Elon Musk, Amazon Inc’s Jeff Bezos, Bill Gates, and Warren Buffett in the last quarter of the current fiscal. Adani’s net worth has surged by around 27% in 2022 fiscal year.
Adani’s plummeting stocks have raised concerns about the likelihood of a wider impact on India’s financial system. CLSA estimates that Indian banks were exposed to about 40 percent of the 2 trillion rupees ($24.53 billion) of Adani group’s debt in the fiscal year to March 2022. India’s Adani group shares sank on Thursday after market turmoil forced the conglomerate to axe a crucial $2.5 billion stock offer, deepening its market losses to more than $100 billion and sparking worries about the potential systemic impact. The withdrawal of Adani Enterprises’ share sale marked a dramatic setback for Gautam Adani, the school dropout-turned-billionaire whose fortunes rose rapidly in recent years, but have fast dwindled due to a US-based Hindenburg research company short-seller’s critical research report released on January 24. The billionaire Gautam Adani’s plunge who has forged partnerships with foreign players and marquee investors in a global expansion of businesses that stretch from ports to mining to cement to securing a contract from Indian government to manufacture Air Force jets for Indian Air Force. India’s central bank Reserve Bank of India has asked lndia’s nationalised banks for details of their exposure to the Adani group of companies. Estimated 40 percent exposure. of the 2 trillion rupees ($24.53 billion) of Adani group’s debt in the fiscal year to March 2022. Citigroup’s wealth unit has stopped extending margin loans to its clients against securities of Adani group and decided to cut the loan-to-value ratio for credit against Adani securities to zero on Thursday, similarly other financial institutions like credit Suisse have to stopped further transactions against Adani shares.
Meanwhile short-seller Hindenburg’s criticisms intensified, and In the fallout of the attack, Adani also lost his title as Asia’s richest man. Adani Enterprises — the flagship company plunged 10 percent after opening higher on Thursday. Other group companies — Adani Ports and Special Economic Zone, Adani Total Gas, Adani Green Energy and Adani Transmission — fell 10 per each, while Adani Power and Adani Wilmar dropped 5 percent each. Adani has slipped in the ranking of the world’s richest to 97 presently as per Forbes’ list, The selling and simultaneous slide in Adani fortunes may intensify further in coming days. Unless Adani is able to regain the confidence of institutional investors.
Hindenburg’s report last week alleged an improper use of offshore tax havens and stock manipulation by the Adani group and also raised concerns about high debt and the valuations of seven listed Adani companies. the Adani group in its response said it had the complete support of investors, but investor confidence has tapered in recent days. India’s federal government and its finance ministry have so far maintained a stoic silence on the Adani stock rout so far. Gautam Adani, and Adani Group said that Hindenburg Research’s fraud claims against the firm were a “calculated attack on India,” a attack on sovereignty on same lines when Indian government reacted to a story last year in Wall Street Journal regarding a dispute between a investor of America with commercial arm of India’ space agency. Adani Group in a written statement which is over 400 pages long, was released as a rebuttal of fraud allegations by short seller Hindenburg Research. On Sunday, Hindenburg said that Adani “failed to specifically answer 62 of 88 questions” detailed in its report. Without citing evidence, Adani Group also accused the Hindenburg report of intending to enable the US-based short seller to book financial gains. “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 stated. Hindenburg in it’s reply stated further that research group believe India is a vibrant democracy and an emerging superpower with an exciting future.” “And also believe India’s future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation.”
Apart from other issues in India the economic issues such as high inflation and crony capitalism, mental health, majoritarian politics and press freedom also impact the overall growth of the economy. Hindenburg research in it’s report has stated that Gautam Adani, is involved in a massive and “brazen stock manipulation” and “accounting fraud scheme”. It said that the company is “pulling the largest con in corporate history”. if the Adani Group’s bubble bursts, as per emerging scenarios the Indian stock market may experience a ripple effect.” a massive default by one or several companies of Adani will rock not just the equities markets but India’s economy overall. This is because the firms are embedded in the country’s infrastructure. Another reputable Research firm Credit Sights in August 2022 had red-flagged the Adani Group’s debt-funded expansion appetite.
In January, Gautam Adani appeared in a rare televised interview on a Hindi news channel, India TV, to answer a host of questions from a fawning show anchor about how he became Asia’s richest man. When asked about his strong rapport with Indian Prime Minister Narendra Modi and if the government had played a role in helping build his wealth, Adani responded, “I don’t chase numbers. For me, the bigger question is, ‘What can I do for the nation?’” His answer was met with thunderous applause from the crowd, and later, he added, “This balloon will keep flying as long as India is progressing.”
Adani’s comments appeared to be a nod to “India Inc”—a term that captures the country’s booming corporate and IT sectors that are major vehicles of its economic growth on the global stage. But a recent investigative report issued by Hindenburg Research is finally bursting that balloon. The fallout of the allegations is already reverberating through global stock markets. In a video appearance, Adani’s embattled Chief Financial Officer Jugeshinder Singh stood in front of a giant Indian flag, drumming up nationalist support that appeared to signal a message that any foreign scrutiny of Adani was an assault on the success of India itself. The saga has shone a light on the relationship between India’s business and political elite, bringing into question whether India, faced with accusations of crony capitalism, can become a global economic juggernaut Adani’s difficulties only underscore the limited progress India has made in taming the excessive power of its growing band of super-rich ‘Bollygarch’ tycoons and the way in which they use political connections to their advantage. India’s recent economic growth has rested on a model that champions nationalist industrialists like Adani, who reiterated this during his interview on India TV by saying, “what I’m seeing now is that this country is charging ahead in progress.” In India, family-run conglomerates like Adani’s have often been built out of the rapid consolidation of state assets, market monopolization, and stifled competition—which in 2021 led to the richest 1% of Indians owning more than 40% of the country’s total wealth, according to a report by Oxfam. (The figure stands at 32% in the United States.)
