The turmoil from Hindenburg’s Jan. 24 report has resulted with Adani stocks now having lost US $120 billion, more than half of their market value. The Adani group has been specifically accused for “(1) stock manipulation (2) and laundering money through Adani’s private companies onto the listed companies’ balance sheets to maintain the appearance of financial health.”
Gautam Adani, a self-made Indian billionaire with a vast enterprise that made him the third-richest person in the world and the wealthiest man in Asia (According to Forbes list of billionaires), has seen more than half of his fortune disappear over the course of 10 dramatic days.
The Adani Group lost more than US $120 billion (Reuters) in market value as investors jumped ship.
All this occurred on January 24, 2023, when a small U.S. short-seller business, Hindenburg Research, accused the Adani Group of stock manipulation and fraud, causing the market to crash. The report had 88 questions directed at the Indian conglomerate, charging it with using well-known tax havens and with having a primary objective of fraudulently inflating the market value of its listed companies.
The most damaging of the Hindenburg contentions is that Vinod Adani, Gautam Adani’s oldest brother, has created a large number (38, by Hindenburg’s count) of shell companies based in Mauritius, and used them specifically for “(1) stock parking (2) and laundering money through Adani’s private companies onto the listed companies’ balance sheets to maintain the appearance of financial health” (Washington Post).
In response, the Adani Group executives retaliated, refuting the accusations in a thorough 413-page report. They referred to it as “nothing but a lie” and a “calculated attack on India.” However, Adani was forced to withdraw when a 2.5-billion-dollar stock sale happened to raise additional funds for the business.
Considering Adani is considered a hero in India, the amount of power he yields is beyond incredible amongst groups like Ambanis. He is also known to have close ties with Modi, and there are claims that Modi’s influence also helped him gain power. Although India’s Home Minister Amit Shah denied all allegations of favoring the conglomerate by stating, “Indian Prime Minister Narendra Modi’s party has “nothing to hide or be afraid of” on the controversy over the Adani group.
According to India’s Economic Times report, “Adani group executives have been holding negotiations since last week with Abu Dhabi’s International Holding Company (IHC) for capital infusion,” into Adani Enterprises or other group entities.
