New Delhi: The Adani Group on Thursday said it is examining legal options to take “punitive action” against Hindenburg Research for “negligent” attempts to sabotage a mega share sale in the group’s flagship firm. A statement to which American Activist Investor responded by saying it stands by its report alleging “brazen” market manipulation and accounting fraud by the group.
A day after Hindenburg Research made damaging allegations, the Adani group issued a brief statement warning of action, hours after Hindenburg said on its Twitter handle that the Indian group had answered none of the 88 “direct” questions. Has not answered. It said in the report that it wants them to file a lawsuit in the US where a long list of documents will be sought in the legal discovery process.
“The maliciously mischievous, uncorroborated report published by Hindenburg Research on January 24, 2023 has adversely affected the Adani Group, our shareholders and investors. The volatility in the Indian stock markets created by the report is a matter of great concern and has Undue suffering has been caused to Indian citizens,” Adani Group chief Jatin Jalandhwala said in a statement.
He said the report and its baseless content were designed to have a detrimental effect on the share prices of Adani group companies, as Hindenburg Research, by its own admission, stands to profit from a fall in Adani’s shares.
“We are deeply troubled by this deliberate and reckless attempt by the foreign entity to mislead the investor community and general public, bring down the goodwill and reputation of the Adani Group and its leaders, and damage the FPO (Follow-on Public Offering) Adani Enterprises,” he said.
“We are evaluating relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research.” However, the statement did not say whether the group plans to sue Hindenburg. Hindenburg, a US investment research firm specializing in activist short-selling, said on Wednesday that its two-year investigation revealed that the Adani group “engaged in a brazen stock manipulation and accounting fraud scheme spanning decades”.
The report comes as Adani Enterprises’ Rs 20,000 crore follow-on share sale opened for institutional investors. All the listed shares of the group gained after the report. Adani Enterprises closed down 1.54 per cent on Wednesday, while Adani Ports & SEZ closed down 6.3 per cent. This also caused the group’s founder and chairman Gautam Adani to slip to the fourth spot in the world billionaires index with a net worth of USD 119 billion, behind Jeff Bezos’ USD 120 billion.
Hindenburg Research said, “In the 36 hours since the release of our report, Adani has not addressed a single critical issue we raised.” “At the conclusion of our report, we asked 88 direct questions that we believe will give the company an opportunity to be transparent. So far, Adani has not answered any of these questions.”
Stating that it “fully stands by” the report, Hindenburg said it believed any legal action taken against it would be meritless. “If Adani is serious, it should also file a lawsuit in the US where we operate. We have a long list of documents to be sought in the legal discovery process.” Report of 32,000 words, with over 720 citations and prepared over the course of 2 years, without research. After the report surfaced, Adani Group had said that it was surprised to see the report surfaced without making any effort to contact it to obtain the factual matrix.
“The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations, which have been tested and rejected by India’s highest courts,” the port-to-energy group said in a statement.
It had questioned the timing of the report, saying its publication ahead of the FPO “clearly betrays the intention of maligning the reputation of the Adani Group with the main objective of causing damage”. “Adani Group founder and chairman Gautam Adani has amassed a net worth of roughly USD 120 billion, largely through stock price appreciation in the group’s seven major listed companies over USD 100 billion in the last 3 years. 819 percent over that period,” the US researcher’s report said.
The Hindenburg report details a web of Adani-family-controlled offshore shell entities in tax havens stretching from the Caribbean and Mauritius to the United Arab Emirates, which it claims are used to promote corruption, money laundering and taxpayer evasion. While the funds of the group were misappropriated. listed companies.
It added, “Our research included speaking with dozens of individuals, including former senior executives of the Adani Group, reviewing thousands of documents and conducting site visits in nearly half a dozen countries.” Hindenburg claimed to have uncovered “rudimentary efforts designed to cover up the nature of certain shell entities”.
“Even if you ignore the findings of our investigation and take Adani Group’s financials at face value, its 7 core listed companies are down 85 per cent on a fundamental basis,” the report said. Listed Adani companies have also taken substantial debt, including pledging their inflated shares for loans, putting the entire group in a precarious financial position.
Adani Group has repeatedly dismissed the debt concerns. Its chief financial officer Jugshinder Singh said on a media call on 21 January that “No one has raised debt concerns for us. Not a single investor has”. “Based on the detailed analysis and reports prepared by financial experts and leading national and international credit rating agencies, the investor community has always reposed faith in Adani Group,” the group said on Wednesday.
“Our informed and knowledgeable investors are not swayed by one-sided, motivated and baseless reports with vested interests.”