The Adani Group has accused a US investment firm of launching “a calculated attack” on India by publishing a report alleging widespread fraud at the power ports conglomerate.
Hindenburg Research released its report on the billionaire’s business last week, accusing the group of “brazen stock manipulation and accounting fraud scheme spanning decades”.
He said he had taken a short position on Adani Group companies, meaning they would benefit from a drop in their value.
Since the release of the Hindenburg report, Adani’s business empire has lost more than $70 billion in its stock market value. The infrastructure tycoon’s net worth also plummeted by about $30 billion, according to the Bloomberg Billionaires Index.
He is still Asia’s richest man, with a personal fortune of more than $92 billion, $10 billion more than Indian businessman Mukesh Ambani.
The Adani Group had already denounced the Hindenburg report as “baseless” and “malicious” in its initial response a few hours after the report was released and said on Thursday it was considering legal action.
This was followed up on Sunday with a lengthy and angry rebuttal of over 400 pages, in which he called Hindenburg’s allegations “baseless and discredited” and said the research firm had an “ulterior motive”.
“This is fraught with conflicts of interest and is only intended to create a false securities market to allow Hindenburg, an admitted short seller, to make massive financial gains by illicit means at the expense of countless investors,” he said.
rapid expansion
The 60-year-old tycoon founded the Adani Group more than 30 years ago and is seen as a close ally of India’s current Prime Minister Narendra Modi.
Before the defeat, which continued in the Mumbai stock exchange this Monday, the markets were rooting for the businessman and his breakneck pace of expansion.
Investors were betting on the ability of the self-taught man to expand his business in sectors that Modi prioritized for development.
In its detailed response on Sunday, the Adani Group portrayed the US short seller’s report as an “attack” on India, its economy and investors.
“This is not just an unwarranted attack on any particular company, but a calculated attack on India, the independence, integrity and quality of Indian institutions and India’s history of growth and ambition,” he said.
Hidenburg concluded his report last week with 88 questions for the Adani Group. These ranged from asking for details about the group’s offshore entities, to why it has “such a complicated and interconnected corporate structure”.
The Indian conglomerate called these questions “rhetorical innuendos coloring rumors as facts”. He then sought to answer them, and published some tables and graphs to substantiate his position.
The lengthy rebuttal sought to reassure investors about the group’s debt, banking relationships and corporate governance practices. Shares in Adani Enterprises, the group’s flagship company, rose more than 4% on Monday, but most Adani shares extended last week’s losses.
Hiding behind “nationalism”?
The conglomerate’s chief financial officer, Jugeshinder Singh, likened the Indian market’s reaction to one of the most dire events in the country’s colonial past under British rule.
“At Jallianwala Bagh, only one Englishman gave an order and the Indians shot other Indians. So am I surprised by the behavior of some Indians? No,” Singh told Mint Business Daily in an interview published on Monday.
On April 13, 1919, British Brigadier General Reginald Dyer ordered his soldiers to fire without warning at a peaceful protest of thousands of unarmed people in Jallianwala Bagh, a public garden in the city of Amritsar. They stopped firing 10 minutes later when they ran out of ammunition. The horrific event is now known as the Jallianwala Bagh or Amritsar Massacre.
Hindenburg’s claims come at a sensitive time for Adani. He aims to raise 200 billion rupees ($2.5 billion) by issuing new Adani Enterprises shares this month. The offer will close on Tuesday.
Hindenburg responded to Adani’s rebuttal by saying that “fraud cannot be obscured by nationalism”.
“The Adani Group has tried to match its meteoric rise and the wealth of its chairman, Gautam Adani, with the success of India itself,” he said in a Twitter post on Sunday.
Hindenburg added that the group ignored “all major allegations that we raise”.
“In terms of substance, Adani’s 413-page response only included about 30 pages focused on issues related to our report,” he said.
“The remainder of the response consisted of 330 pages of court records, along with 53 pages of high-level finance, general information, and details about irrelevant corporate initiatives such as encouraging female entrepreneurship and safe vegetable production.”
Source: CNN Brasil
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