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U.S. investor Hindenburg Research has released a report and a statement accusing Indian conglomerate Adani Group of being the “biggest con in corporate history,” according to a report by the research group on Tuesday.
Gautam Adani, the richest man in Asia and India, saw his wealth plummet to seventh place on the list of the world’s wealthiest people on Friday, according to Forbes.
Adani's fortune dropped by more than $22 billion to around $97 billion in the first trading hours of Friday, 27th January 2023, as per the Forbes Real Times Billionaire Index,
Hindenburg said in a statement that Adani has failed to address any of the issues raised in its report that accused the company of engaging in a “brazen stock manipulation and accounting fraud scheme”.
'Bluster and threats'
“Instead, as expected, Adani has resorted to bluster and threats,” Hindenburg’s statement said.
“Regarding the company’s threats of legal action, to be clear, we would welcome it. We fully stand by our report and believe any legal action taken against us would be meritless.
“We have a long list of documents we would demand in a legal discovery process.”
Fundamentally, the accusations against Adamani consist of claims that the group was loading companies with debt that puts the entire group on a “precarious financial footing."
Soon we will release a report on what we strongly suspect to be the largest corporate fraud in history.
— Hindenburg Research (@HindenburgRes) January 24, 2023
The allegations cannot come at the worst time for Adani as the group has scheduled a fundraising attempt that is seeking US$2.5bn from investors to fund capital expenditure and reduce debt.
So far, Adani has called Hindenburg's report “maliciously mischievous, unresearched” and has stated he may seek “remedial and punitive” action.
“Clearly, the report and its unsubstantiated contents were designed to have a deleterious effect on the share values of Adani Group companies as Hindenburg Research, by their own admission, is positioned to benefit from a slide in Adani shares,” Adani Group’s legal head Jatin Jalundhwala said in a statement released on Thursday and acquired by The Guardian.
Adani has further claimed that the report’s allegations have already been rejected by India’s highest courts.
Meanwhile, on Saturday Bloomberg reported that people familiar with the matter said that Adani would release a detailed response to Hindenburg's allegations only after the completion of a new share sale that’s set to conclude on January 31.
Speaking on condition of anonymity, one of the people revealed that the group had prepared a response of more than 100 pages but was seeking legal counsel on when to release it.
Losses already reported
The group has already lost more than $52 billion in market value in two sessions due to the damming new allegations. This has resulted in Adani himself losing in excess of $20 billion, an equivalent of about one-fifth of his total fortune.
Hindenburg also stated that their research report was based on a two-year investigation that included interviews with dozens of people, including former Adani Group executives, as well as a review of documents.
A stock exchange statement from the business noted participation from Maybank Securities and the Abu Dhabi Investment Authority among others.
The revelation came out at the t time as anchor investors were bidding for Adani's secondary share auction on Wednesday, Al Jazeera reported.
Jugeshinder Singh, the chief financial officer of the Adani Group, expressed amazement at the findings in a statement and described them as a “malicious combination of selective misinformation and stale, baseless and discredited allegations.”
