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Friday, January 27, 2023

Adani Group shares downfall after Hindenburg alleges ‘biggest scam in corporate history’

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Shares of Indian Adani Group companies fell sharply on Wednesday morning after activist investment firm Hindenburg Research revealed a short position against the company and accused companies owned by the world’s third-richest person of fraud. Gautam Adani.

key facts

In a report revealing his short position, Hindenburg alleged that the Adani group of companies had “engaged in a brazen scheme of accounting fraud and stock manipulation over the decades.”

Shares of Adani Enterprises, the flagship company of the Adani Group, were down more than 3% at Rs 3,333 ($40.77) on Monday afternoon, while Adani Ports fell more than 6.5% to Rs 711.

Other companies listed in the Adani Group also fared poorly: shares in food company Adani Wilmar fell almost 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 Adani recently acquired in a hostile takeover, also fell 5%, while cement companies Ambuja and ACC, which were also recently acquired by Adani, fell. 8% and 6.6%, respectively. .

Hindenburg says he has taken his short positions “through US-traded bonds and non-Indian-traded derivatives.”

The timing of the disclosure is likely a major blow to the conglomerate as its flagship firm Adani Enterprises is due to make a follow-up public offering of Rs 200 billion ($2.45 billion) on Friday.

Forbes has reached out to the Adani Group for comment.

Forbes rating

Wednesday’s sell-off, following the Hindenburg disclosure, has led to a 5% or $6.4 billion drop in Gautam Adani’s fortune. According to our estimates, Adani’s total net worth now stands at $120 billion, making him the third richest person in the world. If the sell-off continues, Adani may have to cede third place to Jeff Bezos, whose net worth we estimate at $119.5 billion.

This is a developing story.

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