- Adani publishes 413-page rebuttal to Hindenburg report
- U.S. short-seller report triggers Adani share price drop
- Adani says it complies with law, required disclosures
- Adani CFO confident $2.5bn share sale will succeed
NEW DELHI, Jan 30 (Reuters) – India’s Adani Group on Sunday issued a detailed pushback against a Hindenburg Research report that sparked a $48 billion stock plunge, saying it complied with all local regulations. laws and have made the required regulatory disclosures.
A conglomerate led by Asia’s richest man and Indian billionaire Gautam Adani said last week’s Hindenburg report was designed to allow the U.S.-based short-seller to argue without citing evidence. Lock in proceeds.
For Adani, 60, the stock market crash is a dramatic setback for the school dropout, who has rocketed in recent years to become the world’s third-richest person, ranking seventh on the Forbes list last week.
Adani Group’s response comes as its flagship Adani Enterprises (ADEL.NS) pushes ahead with a $2.5 billion share sale. This was glossed over by the Hindenburg report, which expressed concerns about debt levels and the use of tax havens.
“All our transactions with entities that qualify as ‘related parties’ under Indian law and accounting standards have been duly disclosed by us,” Adani said in a 413-page response published late Sunday.
It added: “This is rife with conflicts of interest for the sole purpose of creating a phony securities market in which Hindenburg, an established short-seller, can improperly obtain enormous financial gain at the expense of countless investors.”
Hindenburg said on his website that Adani’s “response largely confirms our findings but ignores our key issues.” Derivatives short Adani Group.
Its report questioned how the Adani group used offshore entities in tax havens such as Mauritius and the Caribbean island, adding that certain offshore funds and shell companies “surreptitiously” held shares in Adani-listed companies.
Adani said the research report made “misleading claims about offshore entities” without any evidence.
Hindenburg said it “found that Adani lacked a direct and transparent answer” to the allegations of using an offshore entity to “tell”.
Adani said on Thursday it was considering action against Hindenburg, who responded the same day that he would welcome such a move.
The Hindenburg report also said five of the seven major listed Adani companies had current ratios below 1, a measure of current assets less recent liabilities, which indicated “increased short-term liquidity risk.”
It said main-listed Adani companies had “substantial debt”, which put the entire group on “unstable financial footing”, and that the shares of seven Adani-listed companies fell by 85% due to what it called “sky-high valuations”.
In response, Adani said its group of companies had “sustained deleveraging” over the past decade.
Adani Group defended the pledge of the shares of its promoters or major shareholders, saying that financing with shares as collateral is a common practice globally, and that large institutions and banks provide loans on the basis of comprehensive credit analysis.
The group added that India has a sound disclosure regime and its promoter pledged positions in portfolio companies have fallen from over 50% in some listed stocks in March 2020 to less than 20% in December 2022 .
The Hindenburg report and its aftermath are seen as one of the biggest career challenges facing billionaires, whose business interests range from ports, airports, mining and power to media and cement.
Adani’s response included more than 350 pages of attachments that included snippets of annual reports, public disclosures and early court rulings.
Adani said Hindenburg had sought answers to 88 questions in its report, but 65 of them related to matters disclosed by Adani portfolio companies in their annual reports.
The rest relate to public shareholders and third parties, and some are “baseless allegations based on imagined patterns of fact,” Adani said.
“Adani failed to answer 62 of our 88 questions specifically,” Hindenburg said.
Hindenburg is best known for shorting electric truck maker Nikola Inc (NKLA.O ) and Twitter.
Adani also responded to Hindenburg’s allegations against the company’s auditors, stating that “all of these auditors we have engaged have been duly certified and qualified by the relevant statutory bodies.”
Its response came hours before Indian markets opened, when a $2.5 billion secondary share sale will begin its second day of subscriptions. Friday’s slump sent Adani Enterprises shares below their offering price, raising questions about its success.
In a separate statement on Sunday, Adani Group chief financial officer Jugeshinder Singh said the company was focused on the share sale and believed it would be successful. He also said its key investors had shown confidence and continued to invest.
“We believe the FPO (follow-on public offering) will also go through smoothly,” he said.
Reporting by Aditya Kalra, Aditi Shah, Jayshree Upadhyay and Anirudh Saligrama in Bengaluru; Editing by Kevin Liffey, Alexander Smith and Muralikumar Anantharaman
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