Adani Group has responded to activist investor Hindenburg Research’s explosive investigation into Gautam Adani’s Indian business empire which detailed a litany of accounting fraud, stock manipulation and money laundering allegations over a 33,000-page hit piece.
Hindenburg Research, a well-known New York short seller, carved US$50bn out of Adani Group’s market value when it laid the go-short case for Adani last week.
Those losses have since piled up to over US$75bn across the Adani Enterprises flagship and Adani Green Energy and Adani Transmission subsidiaries.
Asia’s richest man Gautam Adani’s personal wealth has taken a US$20bn hit, though as of today, he still remains among the 10 wealthiest people in the world.
Hindenburg Research: From niche activist investor to Gautam Adani's US$50bn headache
Gautam Adani rebuked Hindenburg’s claims with a tome of his own, a 400-page document simply titled ‘Adani Response’.
“We are shocked and deeply disturbed to read the report published by the ‘Madoffs of Manhattan’ Hindenburg Research on 24 January 2023 which is nothing but a lie,” the document began, calling the firm’s research “a malicious combination of selective misinformation and concealed facts relating to baseless and discredited allegations”.
Adani contends that Hindenburg Research is creating a false market “to book massive financial gain through wrongful means at the cost of countless investors”.
Adani went as far as to call Hinderburg’s actions “a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India”.
The conglomerate responded to a number of specific accusations and criticisms, including the use of Monarch Networth Capital as a broker, which Hindenburg claims poses “an obvious conflict of interest” due to Adani having a small ownership stake in the broker, which was once subject to sanctions from the Securities and Exchange Board of India (SEBI).
“Monarch’s ‘suspension’ that has been alluded to, was a one-month suspension more than a decade ago in 2011 and has no further relevance to their appointment for the offer for sale,” explained Adani, continuing: “It may be noted that several other banks (including international banks) have been subjected to similar or lengthier suspensions in the Indian market. This fact has been deliberately omitted by Hindenburg.”
Claims of alleged customs violations against Adani Group “could have a material adverse effect on our business” the document claims.
Despite the controversy, Adani Group remains committed to a US$2.4bn share offer targeted at international investors, of which Abu Dhabi-owned holding company IHG intends to invest about US$400mln.