Billionaire Adani's Empire Loses $51 Billion in 48 Hours

Shares of the Adani Group, the Indian energy and infrastructure conglomerate headed by one of the world’s richest men, Gautam Adani, plummeted Friday after a U.S. research firm published extensive allegations of fraud that rocked business circles in the world’s fifth-largest economy.

The sell-off, which triggered Indian markets to halt trading on several Adani subsidiaries, came three days after Hindenburg Research, a short-seller firm based in New York, published a lengthy report that accused Adani of, among other things, artificially boosting his share prices over several decades by using a network of overseas shell companies linked to his family members.

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The firm said it believed Adani companies were dangerously indebted and its stock prices were overvalued by more than 80 percent. Hindenburg announced it had taken a short position, meaning it was betting that Adani shares would fall.

The Adani Group has denied the allegations and said it was considering legal action against Hindenburg. In a statement issued Wednesday, Chief Financial Officer Jugeshinder Singh called the report “a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts.”

By the end of Friday, shares in Adani Enterprises, the group’s umbrella holding company, fell by more than 18 percent, while several other subsidiaries, including Adani’s renewable energy and electricity transmission businesses, fell by 20 percent. The seven publicly traded Adani companies lost roughly a combined $50 billion in market capitalization this week, according to Bloomberg News.

Scrutiny of Adani firms’ health expanded on Friday to affect India’s private- and public-sector banks, which hold a total of about 40 percent of the companies’debt, according to CSLA, a Hong Kong-based investment bank. Analysts said Friday that the balance sheets of Indian banks were healthy enough to withstand the risks of holding Adani debt. Still, stocks for the Indian financial sector fell 2.5 percent.

The Hindenburg report and resulting stock collapse has dented the image of India’s leading business titan, a self-made billionaire who rose from obscurity to become a top supplier of everything from coal-fired power to shipping services to packaged foods, renewable energy and digital media. Until this week, Adani’s net worth seemed to grow exponentially, rising from $9 billion in 2020 to $127 billion in December, making him at one point the world’s second-richest person.

 

Ref: Billionaire Adani's Empire Loses $51 Billion in 48 Hours (washingtonpost, thestreet, yahoo)