Gautam Adani’s business empire has shed billions of dollars in value based on a report alleging accounting fraud, which has been vehemently denied by the Indian tycoon’s firm.
Who is Gautam Adani?
Adani, 60, the publicity-shy school dropout from humble origins, has become the world’s third-richest person – as of last week – with a net worth of nearly $130 billion.
After moving to Mumbai in his teens to work as a diamond sorter, he started his own import-export business. His big break came in 1995 when he acquired a shipping port, just as India’s economy was opening up.
What does his kingdom do?
Today the Adani Group does everything from power generation and coal mining to cement, media and food. Its seven listed entities had a market value of around $220 billion in January.
Critics say Adani’s closeness to Prime Minister Narendra Modi, a native of Gujarat state, has given his group an unfair advantage in winning business.
Adani became the richest man in Asia due to the astonishing increase in the share prices of his firms. According to Forbes, only Elon Musk and Bernard Arnault and family were richer globally.
What is the allegation?
On 24 January, Hindenburg Research – an activist US investment group that bets on declining stocks – accused the Adani group of conducting “a brazen stock manipulation and accounting fraud scheme over the course of decades”.
Hindenburg’s two-year investigation also found that elder brother Vinod Adani, “through several close associates, manages a vast labyrinth of offshore shell entities”.
“We believe that the Adani Group has been able to commit large-scale fraud in broad daylight in large part because investors, journalists, citizens and even politicians are afraid to speak up for fear of retribution,” it said.
What was the result?
According to Bloomberg News, the report has triggered a massive selloff in shares of Adani’s firms, wiping out more than $68 billion in market value. Trading in some shares was temporarily halted.
Adani’s personal wealth has declined by nearly $40 billion and he has dropped to number eight on the real-time Forbes rich list.
The timing was also dire, just as Adani Group is seeking to raise $2.5 billion to shore up its finances with a share sale ending on Tuesday.
How has Adani responded?
On 25 January, Adani’s finance chief called the Hindenburg Report “a malicious combination of selective misinformation and stale, baseless and discredited allegations, which have been tested and rejected by India’s highest courts”.
On Sunday the firm issued a 413-page statement saying it denied all of Hindenburg’s claims, calling the group “the Madoffs of Manhattan” – a reference to crooked financier Bernie Madoff.
This is not just an unwarranted attack on a specific company, but a systematic attack on India, the independence, integrity and quality of Indian institutions and India’s growth story and ambition.
Did it reassure investors?
Some of Adani’s firms made an upward move on Monday, but overall investors continued to dump Adani shares, wiping out billions in market value.
Hindenburg said only about 30 pages of Adani’s statement focused on issues related to his report.
“The rest of the response consisted of 330 pages of court records, as well as 53 pages of high-level financial, general information, and details on irrelevant corporate initiatives, such as how it encourages female entrepreneurship and the production of safe vegetables,” it said. Told.
The text of this story is published from a wire agency feed without any modification. Only the headline has been changed.
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