More than $9bn (£7.3bn) was wiped off the fortune of companies partly owned by the world’s third-richest person, after an activist investor accused him of “pulling the largest con in corporate history”.
Shares in listed companies tied to Adani’s empire Adani Group lost $9.4bn in market value on Wednesday after short seller investment firm Hindenburg Research published a detailed investigation into accusations of “brazen stock manipulation”, “accounting fraud” and “money laundering.”
Hindenburg published its two-year investigation on Twitter early on Wednesday just 48 hours before Adani Group is due to attempt a huge stock market fundraising drive.
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Adani Group – How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate Historyhttps://t.co/JkZFt60V7f
— Hindenburg Research (@HindenburgRes) January 25, 2023
Adani Group denied the allegations, which it described as a “malicious combination of selective misinformation and stale, baseless and discredited allegations” and accused Hindenburg of attempting to damage its reputation before a large share offering.
Jugeshinder Singh, its chief financial officer, said: “The timing of the report’s publication clearly betrays a brazen, mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming follow-on public offering from Adani Enterprises. The group has always been in compliance with all laws.”
Adani Enterprises, the main company in the sprawling $218bn conglomerate, will on Friday launch India’s biggest public secondary share offering, issuing new shares as it aims to raise $2.5bn to fund capital expenditure and pay off debts.
Hindenburg is a US-based activist fund named after the 1937 Hindenburg disaster, in which a hydrogen-filled airship burst into flames. The fund, which describes its mission as exposing avoidable disasters – accused Adani of loading companies with “substantial debt” that left the entire group on a “precarious financial footing”.
Singh said the Adani Group was shocked that Hindenburg had published its report “without making any attempt to contact us or verify the factual matrix”.
“The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts.
“Our informed and knowledgable investors are not influenced by one-sided, motivated and unsubstantiated reports with vested interests.”
Adani, 60, is the world’s third-richest person with an estimated $119.5bn fortune according to Forbes. The only people richer than him, according to the magazine, are Bernard Arnault and Elon Musk.
He founded the mining-to-energy conglomerate Adani Group after dropping out of university. Many of his businesses are involved in natural gas, coal mining and electricity generation, and are likely to have benefited from the global energy price increase.
Adani’s conglomerate owns India’s largest private sector seaport and airport operator as well as a huge coalmine in Queensland, Australia. The company has faced fierce criticism for its environmental impact on the Great Barrier Reef as well as its use of billions of litres of water a year.