Adani Group market selloff continues


A war of words between the Adani Group and Hindenburg Research escalated on Monday as shares in some of the Indian conglomerate’s listed companies continued to slide sharply after the New York-based activist investor accused the company of trying to use nationalism as a shield to obfuscate “fraud.”

Photo by Ashish Vaishnav/SOPA Images/LightRocket via Getty Images

Just before markets opened in India on Monday, Hindenburg responded to Adani Group’s 413-page rebuttal of its allegations by calling out the company’s use of a “nationalist narrative” to conflate its fortunes with “the success of India itself.”

Hindenburg denied Adani’s accusation that it had engaged in a breach of securities and foreign exchange laws noting that the company had failed to identify any specific laws that had been breached.

Adani Enterprises, the group’s flagship firm, saw its shares rise by 9% on Monday before dropping into the red in early afternoon trading—shares of the group’s six other major listed firms saw sharper declines.

Adani Total Gas, Adani Transmission and Adani Green Energy stocks were the worst hit dropping by 20% while shares of Adani Power and food company Adani Wilmar were down 5%.

In a 413-page response to Hindenburg’s original allegations issued on Sunday, the Adani Group said 65 of the 88 questions had been addressed in public disclosures.

The conglomerate also alleged that the Hindenburg report was driven by “an ulterior motive” to “create a false market in securities” that would allow the short seller to “book massive financial gain through wrongful means.”

In a likely bid to assuage domestic investors and gain public support in India, Adani’s statement attempted to portray Hindenburg’s allegation as an attack on India. The statement said: “This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India.”

Gautam Adani, Chairman of the Adani Group during a press conference in Mumbai
Gautam Adani | Photo by Abhijit Bhatlekar/Mint via Getty Images

A video released by the company last week where Adani Group CFO Jugeshinder Singh addresses some of the allegations came under some criticism from opposition parties in India. Questions were raised as to why Singh’s address was made in front of an Indian flag instead of a company banner or logo.

The group’s founder Gautam Adani is believed to be close to Indian Prime Minister Narendra Modi who’s party has often pushed back on foreign criticism of his government by trying to paint them as an attack on India.

In a scathing response to Adani’s argument that its report was an attack on India, Hindenburg said: “To be clear, we believe India is a vibrant democracy and an emerging superpower with an exciting future. We also believe India’s future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation.”

Forbes Valuation

According to our estimates, Gautam Adani’s net worth currently stands at $85.7 billion, making him the world’s ninth richest person. On Monday alone, Adani’s net worth has shrunk by $11 billion as the market selloff of some of his listed companies continued. Since Hindenburg’s report became public, Adani has fallen from third place in list of the world’s richest and has shed $41 billion from his total net worth.

In its 413-page rebuttal against Hindenburg’s allegations, the Adani Group labeled the activist investor as the “Madoffs of Manhattan.” In a cheeky footnote added to its response on Monday, Hindenburg said: “Adani seems unaware that Madoff lived in Manhattan, so he was quite literally his own Madoff of Manhattan.”

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Further Reading

Gautam Adani Slips From Top 5 Richest As His Net Worth Plummets After ‘Corporate Con’ Accusations (Forbes)

Adani Group Weighs Legal Action Against Hindenburg After Listed Shares Take Major Hit (Forbes)