From meagre beginnings in the 1980s, Gautam Adani has emerged as India’s richest citizen. Now, in just a few days, the foundations of his sprawling empire have been shaken. On January 24th a small New York investment firm, Hindenburg Research, published a report calling the Adani Group “the largest con in corporate history”. In a series of statements, the group responded by saying that the report was “maliciously mischievous”, “unresearched” and intended to “sabotage” a secondary share offering of the group’s flagship listed company, Adani Enterprises. The group also said that Hindenburg had published its report “without making any attempt to contact us or verify the factual matrix”. “We are deeply disturbed by this intentional and reckless attempt by a foreign entity to mislead the investor community and the general public,” wrote the group’s top lawyer, Jatin Jalundhwala.
These fierce denials have not averted a sell-off of shares in Mr Adani’s seven listed companies, first right after Hindenburg’s report was published, then again when markets reopened on January 27th after a public holiday. In two trading days the collective market value of the Adani Group’s listed firms fell by $47bn, or 22%. Mr Adani’s personal fortune declined from $122bn at the end of 2022 to $93bn, according to the Hurun Report, a research firm. The episode has also drawn the world’s attention to one of India’s corporate success stories—and a significant motor of the country’s recent economic growth.
In targeting Mr Adani, Hindenburg could not have selected a bigger whale. After dropping out of school at the age of 16, the entrepreneur moved through a succession of jobs, trading first in diamonds, then in metals and cereals, before entering the infrastructure business. Today his firms run some of India’s biggest ports, warehouse 30% of its grain, operate a fifth of its power-transmission lines, accommodate a quarter of its commercial air…
2023-01-27 17:40:40 A short-seller rattles Gautam Adani’s empire
Source from www.economist.com A storm is brewing in the empire of Gautam Adani, one of the world’s biggest resources investors.
According to a report this week, a short-seller – an investor who bets against a company they are bearish on – has targeted the Indian billionaire’s business empire. To date, the Adani conglomerate, which has interests across power, ports, logistics, and a wide array of other sectors, has been a shining example of the country’s burgeoning economic might.
But the short-seller’s wager could potentially strip away some of the wealth generated from Adani’s business empire, pushing the billionaire’s fortune down the list of the world’s richest. The report’s independent research raises questions about Adani’s business practices, suggesting they have acted improperly in the purchase of a coal mine in Australia’s Galilee Basin.
The report contends that Adani’s operations have cost taxpayers and the local environment millions of dollars in fees and damages. The short-seller’s investigation further alleges that Adani operates as a “nexus of associated companies” and much of the profits from the Australian coal mine have been smuggled out of the country. While Adani has denied all claims made in the report, analysts fear it could set off a domino effect, leading to similarly damaging allegations aimed at the vast business empire.
This skirmish between the billionaire and the short-seller could have far-reaching implications for Adani and the country’s economy as a whole. It remains to be seen how this battle will be resolved and how it could potentially reshape the fortunes of Gautam Adani’s empire.