INDIA/ UNITED STATES: Hindenburg Research, a US-based investment research firm, has alleged that the $218 billion Indian company Adani Group is involved in an “accounting fraud scheme” and “brazen stock manipulation” over the span of decades.
Gautam Adani, the owner of the Adani Group, is “pulling the largest con in corporate history” through heavy leverage and widespread use of tax havens, the report published on Tuesday said.
Hindenburg’s two-year research shows that Gautam Adani’s wealth has grown by more than $100 billion in the last three years. This is mainly because his stock price has increased by 800%.
The Hindenburg report said that the seven major listed companies of the Adani Group are “85%+ overvalued, even if you disregard our investigation and take the companies’ financials at face value.”
The Adani Group has been the focus of four major federal fraud investigations in the past, according to the report. These investigations involved allegations of $17 billion in fraud, money laundering, and theft of taxpayer money.
According to Hindenburg research, Adani family members set up offshore shell companies in tax havens like Mauritius, the UAE, and the Caribbean Islands and fabricated import and export paperwork to generate fictitious or fraudulent turnover and steal money from publicly traded companies.
The report’s release comes shortly before the Adani Enterprises Fundraising Operation, which begins on Friday and intends to collect Rs 20,000 crore to support the group’s ambitious capital expenditure plans for green energy, airports, and greenfield motorways.
Adani Road Transport, Mundra Solar, and Adani Airport Holdings’ debts will be repaid with more than Rs 4,000 crore of the funds raised from the FPO.
The conglomerate said that the timing of the unfavourable report by American short-seller Hindenburg Research, which caused significant stock selling in Adani Group, was done to harm Adani Enterprises FPO.
In response to the Hindenburg report, Jugeshinder Singh, the chief financial officer of the Adani Group, said, “The report is a malicious mix of selective misinformation and old, unfounded, and discredited allegations that have been tested and rejected by India’s highest courts.”
Following the report, which made numerous claims regarding accounting and corporate governance standards and a significant debt load, Adani Group stocks fell up to 10% during the day.
According to Hindenburg, it has short positions in the Adani Group companies through US-traded bonds, non-Indian derivatives, and other non-Indian reference securities.
While shares of Adani Enterprises fell as much as 3.7%, those of Ambuja Cements plummeted by 9.6%, those of Adani Ports dropped by 7.2%, and those of ACC, NDTV, Adani Transmission, and Adani Power plunged by at least 5% each.
Also, BSE data shows that shares of the seven listed entities owned by the Adani Group have dwindled by up to 7% on the Indian stock markets as of the time of publication today. This translates into a $7.7 billion market capitalization loss.
Hindenburg Research, a forensic accounting firm with headquarters in the US and a reputation for producing critical assessments on EVs, was founded by Nate Anderson. Lordstown Motors, Clover Health, and Nikola, an e-truck business, were among the previous targets.
“We look for similar man-made disasters floating around in the market and aim to shed light on them before they lure in more unsuspecting victims,” the research company says on its website.
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