Adani Group Shares Slide After Hindenburg Alleges ‘Largest Con In Corporate History’
Shares of India’s Adani Group companies slid sharply on Wednesday morning after activist investment firm Hindenburg Research disclosed a short position against the conglomerate, while accusing the companies owned by the world’s third richest person, Gautam Adani, of fraud.
KEY FACTS
• In a report disclosing its short position, Hindenburg alleged that Adani Group companies—owned by Asia’s richest man—had “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.”
• Shares in Adani Enterprises, Adani Group’s flagship company, were down more than 3% to Rs 3,333 ($40.77) Wednesday afternoon while Adani ports slumped by more than 6.5% to Rs 711.
• Other Adani Group listed companies also fared poorly, with food company Adani Wilmar’s stock dropping nearly 5%, Adani Power 4.7%, Adani Transmission 5.19%, Adani Total Gas 4.77% and Adani Green Energy 3.55%.
• Shares of Indian news broadcaster New Delhi Television (NDTV)—which was recently acquired by Adani in a hostile takeover—were also down 5%, while cement companies Ambuja and ACC, which were also recently acquired by Adani, fell 8% and 6.6% respectively.
• Hindenburg says it has taken its short positions “through U.S.-traded bonds and non-Indian-traded derivative instruments.”
• The timing of the disclosure is likely a major blow for the conglomerate as its flagship firm Adani Enterprises is set to carry out a Rs 200 billion (USD 2.45 billion) follow-on public offering on Friday.
CRUCIAL QUOTE
In a statement shared with Forbes, Adani Group CFO Jugeshinder Singh dismissed Hindenburg’s report, saying it is “a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts.” The statement adds that the company was never contacted by Hindenburg and criticizes the timing of the report’s publication, saying it “clearly betrays a brazen, mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming Follow-on Public Offering from Adani Enterprises.”
FORBES VALUATION
Wednesday’s selloff, after Hindenburg’s revelation, has led to a 5% or $6.4 billion drop in Gautam Adani’s fortune. According to our estimates, Adani’s net worth now stands at $120 billion, making him the world’s third richest person. If the selloff continues, Adani could cede third place to Jeff Bezos whose net worth we estimate to be $119.5 billion.
NEWS PEG
In its report, Hindenburg makes multiple serious allegations against the Adani family and their group of companies, including the purported use of offshore shell entities and stock manipulation. Hindenburg says it has identified 38 alleged shell companies based in Mauritius “controlled by” Vinod Adani, Gautam Adani’s older brother, along with several other similar firms based in Cyprus, the UAE, Singapore, and several Caribbean Islands. The report alleges the shell companies are used for “stock manipulation” and “laundering money,” using Adani Group’s private companies, onto the books of listed firms “in order to maintain the appearance of financial health and solvency.” The report is also critical of “investors, journalists, citizens and even politicians,” saying they have not spoken up about the “large, flagrant fraud [taking place] in broad daylight” because of a fear of reprisal. As of Wednesday afternoon, the Hindenburg report has seen sparse coverage in Indian media outside of syndicated reports from business news wires like Reuters or Bloomberg.
KEY BACKGROUND
Hindenburg research gained prominence back in 2020 when one of its reports helped bring down Trevor Milton, the founder of the electric truck company Nikola. In its report, Hindenburg accused Nikola of being “an intricate fraud built on dozens of lies” and said Milton was responsible for most of it. The company founder stepped down and was later found guilty of criminal and securities fraud. Hindenburg has also taken on Clover Health and electric vehicle maker Lordstown Motors. In July last year, Hindenburg disclosed a long position on Twitter, betting on the fact that Elon Musk’s planned $44 billion acquisition of the social media company would go through despite efforts by the billionaire to back out of the deal.
Adani Enterprises shares suspended as price falls 10% at open
MUMBAI: Shares in the flagship firm of beleaguered Indian tycoon Gautam Adani were repeatedly suspended on Friday (Feb 3) as a rout triggered by allegations of accounting fraud deepened.
Adani Enterprises fell 10 per cent at the open and plunged by as much as 25 per cent at one point, while Adani Power, Adani Green Energy, Adani Total Gas - in which French giant TotalEnergies has a 37.4 per cent stake - and Adani Transmission were also suspended when they hit their trading stops.
Trading in Adani Enterprises later resumed, only for them to immediately fall another 5 per cent, triggering another halt.
The conglomerate's combined market capitalisation has plummeted by more than US$100 billion since US short-seller Hindenburg Research - which makes money by betting on shares falling - released an explosive report last week.
Adani himself has seen his fortune plummet by tens of billions of dollars, dumping him out of the real-time Forbes rich list top 10 and depriving him of his title as Asia's richest person.
Adani late on Wednesday cancelled a US$2.5 billion stock sale meant to help reduce debt levels - long a concern - restore confidence and broaden its shareholder base.
Big banks including Credit Suisse and Citigroup have stopped accepting Adani bonds as collateral for loans to private clients, according to Bloomberg News.
That fuelled worries about how Adani will raise fresh funds, with Adani dollar bonds trading at distressed levels and signs of contagion in Indian markets increasing, Bloomberg reported.
According to Hindenburg Research, Adani has artificially boosted the share prices of its units by funnelling money into the stocks through offshore tax havens.
This "brazen stock manipulation and accounting fraud scheme" is "the largest con in corporate history", Hindenburg said.
Adani said that it was the victim of a "maliciously mischievous" reputational attack and issued a 413-page statement last Sunday that it asserted showed Hindenburg's claims were "nothing but a lie".
Hindenburg said in response that Adani failed to answer most of the questions raised in its report.
Critics say that Adani's closeness to Prime Minister Narendra Modi, also from Gujarat state, has helped him win business and avoid proper oversight.
https://www.channelnewsasia.com/business/adani-enterprises-shares-suspended-price-falls-10-open-3251426
Temasek remains invested in Adani Ports, says media report
Singapore investor, Temasek Holdings (Private) Limited, remains invested in Adani Ports and Special Economic Zone even though the Indian conglomerate is facing criticism from a US-based forensics research institution, according to a media report.
Temasek “remains invested in Adani Ports, as per their latest public shareholding disclosures", The Straits Times reported on Monday, citing a spokesman for the 49-year-old state-owned investor which has USD 496.59 billion in assets under management as of December 2022.
Temasek, through its subsidiary Camas Investments, owns just over 1.2 per cent in Adani Port, the Singapore broadsheet reported, citing the company’s shareholder information.
The stake was acquired in 2018 for around SGD 147 million.
The Temasek spokesman also said the group does not comment on market speculation.
The Adani Group also runs an edible oil and food business in India called Adani Wilmar via a joint venture with Singapore-listed Wilmar International.
The Group has had a presence in Singapore for over 20 years, and Adani Singapore is the headquarters for operations in the Southeast Asia region, according to earlier media reports.
Media has also reported the Adani Group’s talks with Singapore investors, including Temasek and the Government Investment Corp (GIC), to raise USD 10 billion to fund its USD 100 billion expansion over the next decade, USD 70 billion of which would be for clean energy, ports and cement businesses.
Group Chairman Gautam Adani had addressed the Forbes Asia’s conference in Singapore on September 27, 2022, listing out his ambitious investment plans.
In his speech to the conference, he highlighted the growing global confidence in India, saying, “I expect the flow of FDI into India to further accelerate and rise above USD 500 billion over the next 15 years, making India by far the world’s fastest-growing destination for FDI."
On Sunday, the Adani Group rebutted allegations by the New York-based forensics research firm, Hindenburg Research about stock manipulation and accounting fraud.
https://www.livemint.com/companies/news/temasek-remains-invested-in-adani-ports-says-media-report-11675046558838.html
Explainer: Why is Gautam Adani's Indian empire in turmoil?
MUMBAI: The business empire of Gautam Adani is in mayhem, losing more than $100 billion in value and sending the Indian tycoon tumbling down the global rich list after allegations of major accounting fraud.
Adani, 60, is a publicity-shy school dropout of humble origins who rose to become fabulously rich.
Moving to Mumbai in his teens to work sorting diamonds, he formed 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.
Today, Adani Group has interests in everything from power generation and Australian coal mines to cement, media, food and Israeli ports. Its seven main listed units had a combined market value in January of around $220 billion.
The meteoric rise in the share prices of Adani's units -- the flagship Adani Enterprises rose more than 1,000 percent in five years -- has helped make Adani fabulously wealthy and fund further expansion.
Until last week, Adani had amassed a fortune of $130 billion to make him Asia's richest man and the third wealthiest overall behind only Elon Musk and Bernard Arnault and family, according to Forbes.
On January 24, Hindenburg Research -- an activist US investment group that bets on stocks falling -- accused Adani Group of committing "a brazen stock manipulation and accounting fraud scheme over the course of decades".
This included funnelling money from offshore accounts controlled by Adani's brother Vinod Adani into listed units to inflate their share prices.
Critics say Adani's closeness to Prime Minister Narendra Modi, a fellow Gujarati, has helped him win business unfairly and avoid proper oversight.
The group's breakneck expansion into multiple new business areas has also pushed up debts to levels that have worried some financial experts.
To reduce its leverage, Adani has secured billions in dollars of investment from abroad, including from French oil major TotalEnergies and the United Arab Emirates' International Holding Company (IHC).
The Hindenburg report has sparked a huge sell-off in shares in Adani's firms, wiping out more than $100 billion in market value as of Thursday, according to Bloomberg News. Trading in some stocks has had to be repeatedly halted.
Adani's personal wealth has dived by around $60 billion and he has tumbled down the real-time Forbes rich list to number 16 as of Thursday morning, losing his crown as Asia's richest man to Indian Mukesh Ambani.
Swiss banking giant Credit Suisse and Citigroup in the United States have stopped accepting Adani bonds as collateral for loans it advances to private banking clients, Bloomberg reported, creating further panic.
The timing of the allegations was also terrible, coming just as Adani was seeking to raise $2.5 billion to strengthen its finances with a share sale.
The issue failed to attract ordinary "mom and dad" investors as hoped and only succeeded thanks to large institutional investors, some fellow Indian tycoons and $400 million from IHC.
Late Wednesday, Adani cancelled the sale and announced that all investors would be refunded, saying that going ahead would "not be morally correct".
On January 25, Adani's finance chief called the Hindenburg report a "malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India's highest courts".
On Sunday the firm issued a 413-page statement that it said rebutted all of Hindenburg's claims, calling it an attack on the "growth story and ambition of India".
Hindenburg said Adani's statement failed to answer most of the questions raised in its report.
On Thursday the tycoon released a video message to investors insisting that the fundamentals of his group are "strong" and that its record on paying back debt was "impeccable".
https://timesofindia.indiatimes.com/business/india-business/explainer-why-is-gautam-adanis-indian-empire-in-turmoil/articleshow/97543890.cms
https://www.businesstimes.com.sg/international/global/adani-abandons-us25-billion-share-sale-big-setback-indian-tycoon
Adani’s detailed reply to Hindenburg allegations to come after new share sale completes on Jan 31
NEW DELHI – Adani Group will release a detailed response to allegations made by US short seller Hindenburg Research only after the completion of a new share sale that is set to conclude on Jan 31, according to people familiar with the matter.
The conglomerate owned by Asia’s richest person Gautam Adani had said it would give a detailed rebuttal on Friday, according to bondholders who participated in a conference call with Adani executives. While it had answered some questions, the longer reply did not materialise as expected.
The group has prepared a response of more than 100 pages and is also seeking legal advice on when to release it, one of the people said, asking not to be identified because the information is private. While it will not be before Jan 31, the people did not specify when the reply would come.
A representative for the conglomerate declined to comment.
Hindenburg released its report just days before the billionaire’s flagship firm Adani Enterprises Ltd launched India’s biggest ever primary follow-on public offering that is seeking to raise 200 billion rupees (S$3.2 billion). It was meant to fund capital expenditures and to pay down the debt of its various units.
Hindenburg alleged that its two-year investigation found the Adani Group “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades” and called out the conglomerate’s “substantial debt”. The firm said it is shorting Adani Group through US-traded bonds and non-Indian-traded derivatives, and that its report “relates solely to the valuation of securities traded outside of India”.
The group lost more than US$50 billion (S$65.7 billion) in market value in two sessions, costing Mr Adani himself in excess of US$20 billion, or about one-fifth of his total fortune, according to the Bloomberg Billionaires Index.
The Adani Group said on Thursday that it was exploring legal action against the research firm, calling Hindenburg’s report “maliciously mischievous”, “bogus” and “unresearched”.
https://www.straitstimes.com/asia/south-asia/adani-s-detailed-reply-to-hindenburg-allegations-to-come-after-new-share-sale-completes-on-jan-31
Adani shares dropping like nobody's business!
Bill Ackman Calls Hindenburg's Adani Report ‘Highly Credible’
(Bloomberg) -- Pershing Square’s Bill Ackman found the Hindenburg Research’s report on Adani Group companies “highly credible and extremely well researched,” he said in a Twitter post, less than two days after the American short seller’s swipe at the Indian conglomerate shaved $12 billion off its market value.
“Adani’s response to Hindenburg Research is the same as Herbalife’s response to our original 350-page presentation,” Ackman said, referring to his ill-fated short-selling campaign that lasted more than five years against the weight-loss shakes seller before he exited his position in Herbalife Nutrition Ltd. in 2018.
An Adani Group representative did not immediately respond to an emailed request for comments on the Ackman Twitter post. Ackman said in a separate Twitter post that he’s neither “long or short” in Adani firms nor has done any independent research.
Adani Group, led by billionaire Gautam Adani — the world’s fourth-richest person — said Thursday that it was exploring legal action against Hindenburg Research. The ports-to-power conglomerate also called the Jan. 24 report “maliciously mischievous,” “bogus” and “unresearched.”
Hindenburg, founded by Nate Anderson, published a report earlier this week saying it was shorting the Adani conglomerate’s US-traded bonds and non-Indian-traded derivative instruments. It accused the group of “brazen” market manipulation and accounting fraud.
The wide-ranging allegations of purported corporate malpractice spoke of a web of Adani-family controlled offshore shell entities in tax havens, from the Caribbean, Mauritius and the United Arab Emirates.
Hindenburg claims these were used to facilitate corruption, money laundering and taxpayer theft, while siphoning money from the group’s listed companies. The comglomerate has businesses range from ports to power plants to airports, data centers, renewables, cement makers and media.
The drop in market value continued on Friday for the Adani’s listed companies. The report was out on Wednesday — an exceptionally sensitive day to be hit by a short seller attack since the flagship Adani Enterprises Ltd. opening a $2.5 billion share sale for institutional investors. The anchor book of the follow-on offer was oversubscribed.
The sale, which continues to be open for subscription through Jan. 31, is part of the tycoon’s attempt to seek global credibility for his rapidly-growing empire. Adani is also looking to woo India’s mom and pop investors to broaden his shareholder base. This would help silence critics who highlight his group’s thinly-traded stocks and rising debt.
Highest Standards
The short seller attack on the Adani conglomerate shows the perils of going global for the self-made billionaire as he and his aides are increasingly held to the highest standards of corporate governance.
This level of scrutiny is also something Adani has largely managed to avoid in his home country, where he has mostly faced criticisms over high levels of leverage and political barbs for his perceived proximity to the Indian Prime Minister Narendra Modi.
None of the past challenges have curbed his meteoric rise. In Hindenburg — a relatively small short seller but one with a history of taking down companies like electric vehicle maker Nikola Corp. — Adani may have run into his toughest opponent so far.
“Regarding the company’s threats of legal action, to be clear, we welcome it,” the research firm said in a Twitter post on Wednesday, adding that it was standing by its report. “If Adani is serious, it should also file suit in the US where we operate. We have a long list of documents we would demand in the legal process.”
https://www.bnnbloomberg.ca/bill-ackman-calls-hindenburg-s-adani-report-highly-credible-1.1875530
Leemember, the empress dowager herself previously said that Temasick can afford to be a contrarian investor.
India’s Adani in talks with GIC, Temasek and other investors to raise US$10b: report
INDIAN billionaire Gautam Adani and his family are in early discussions with investors, including Singapore investment firms Temasek and GIC, to raise at least US$10 billion to fund its expansion into clean energy, ports and cement businesses, Mint newspaper reported on Monday (Oct 10).
Adani Group will invest more than US$100 billion over the next decade, most of it in the energy transition business, its chairman Adani said last month, as the ports-to-energy conglomerate accelerates an already aggressive expansion plan.
Adani family members and top group executives held talks with several potential investors, the report said, citing two people with direct knowledge of Adani Group and the Adani family's plans.
Group promoters and top management were in Singapore last week after meeting West Asian and American investors, one of the people was cited as saying.
Citing the second person, the report also said that the capital will be raised via multiple tranches and likely through the sale of stakes in group firms or promoter group-associated entities.
Singapore's sovereign wealth fund GIC and Adani Group did not immediately respond to requests for comment from Reuters.
Temasek said it does not comment on market speculation and rumours.
https://www.businesstimes.com.sg/companies-markets/energy-commodities/indias-adani-talks-gic-temasek-and-other-investors-raise-us10b
This Adani bugger kinda reminds me of WWE's Paul Bearer
WLWLSMDWL!!!!!!