The US short seller Hindenburg Research claims to have found many inconsistencies in the Indian industrial group Adani in its own investigations and is placing bets on a price slide. This occurs promptly. In just three days, nearly $50 billion in stock market capital is wiped out. The group still wants to stick to the share placement.
The Indian group Adani Enterprises is sticking to its planned share placement despite a critical report by the US short seller Hindenburg Research. The $2.5 billion transaction will go ahead as planned, according to the conglomerate of billionaire Gautam Adani. All those involved have full confidence in the planned secondary placement of Adani shares. Insiders had previously said banks were considering extending the placement period or cutting the issue price because of the price slump triggered by the Hindenburg report.
Adani shares slipped 20 percent on Friday, as did several listed subsidiaries. Collectively, seven companies in the conglomerate lost a total of $48 billion in market capitalization as of Wednesday. Before the allegations, the Adani Group had a total market capitalization of $247 billion. India’s banking index also took a hit as investors feared the impact on banks that have lent to the conglomerate.
In a report on Tuesday, US short seller Hindenburg Research expressed doubts about the conglomerate’s debt and asset figures and said it was betting on falling prices for Adani Group companies. The report also accused Adani of misusing companies from offshore tax havens such as Mauritius and the Caribbean islands. The well-known US hedge fund manager Bill Ackman now supports Hindenburg and called the allegations well researched. This increased the pressure on the stock market. The Adani Group had dismissed the Hindenburg report as unfounded and is considering legal action against the New York company.
In the course of the slump in stocks, Gautam Adani also slipped in the ranking of the richest people in the world: According to the business magazine “Forbes”, he is now in seventh place with an estimated net worth of $96.6 billion. Before the shares in his group crashed, he was still in third place.
Gautam Adani comes from the western Indian state of Gujarat, which is also where the Indian Prime Minister Narendra Modi comes from. In the past, the Indian opposition had accused Adani and other super-rich of preferential treatment by Modi’s government. Adani had denied this.
Adani has accumulated wealth over a number of decades by building an expansive business empire. Adani’s business interests touch the lives of millions of Indians every day. Its coal mines and power plants provide electricity to much of the country, while its businesses also sell gas and cooking oil.
Hindenburg Research was founded by Nathan Anderson. Previous targets of his skeptical investigations include Nikola, the electric truck maker whose founder Trevor Milton was later convicted of securities fraud.
