Guatam Adani’s business empire shaken by Hindenburg fraud report


NEW DELHI – Shares in Adani Group, the Indian energy and infrastructure conglomerate led by one of the world’s richest men, Gautam Adani, tumbled on Friday after a U.S. research firm released widespread fraud allegations , shocked the business community in the world’s fifth-largest economy.

The sell-off triggered a halt in trading in several of its subsidiaries in Indian markets, three days after New York-based short-selling firm Hindenburg Research issued a lengthy report accusing Adani of artificially inflating its shares. By using a network of overseas shell companies with ties to his family, he has stock prices over the decades.

The firm said it believed Adani’s company was heavily indebted and valued at more than 80% above fair value, and announced it had taken a short position, meaning it was betting that Adani’s shares would fall.

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Adani Group has denied the allegations and said it was considering legal action against Hindenburg. In a statement on Wednesday, Chief Financial Officer Jugeshinder Singh called the report “a malicious combination of selective misinformation and stale, baseless and uncredible allegations that have been examined and dismissed by the Supreme Court of India.”

Shares in the group’s holding company, Adani Enterprises, were down 15% by midday on Friday, while several other subsidiaries, including Adani’s renewable energy and power transmission businesses, were down 20%. The seven Adani-listed companies lost a combined $50 billion in market value this week, according to Bloomberg.

Singh said the purpose of Hindenburg’s report this week was to disrupt Adani’s secondary offering in a video released by the company, which shows him standing next to an Indian flag.

The group’s apparent closeness to the Indian government has long been seen by the Indian business community as one of its advantages over rivals – but also a point of criticism.

While critics attribute Adani’s success as a leading provider of coal-fired power, shipping, food and renewable energy in large part to his closeness to Prime Minister Narendra Modi, his admirers He argued that he built critical infrastructure that supported India’s economic growth, provided jobs for millions of people, and made investments that were fully in line with the government’s policy objectives.

In this week’s report, Hindenburg highlighted the company’s ability to circumvent regulatory scrutiny and silence criticism in the news media.

“When corporate giants like the Adani Group appear to be able to carry out intricate fraud in broad daylight, and when ordinary citizens fear speaking out against those who use their power and wealth to silence criticism, a system breaks down,” it said . “We hope this report marks the beginning of change.”

India’s broad Sensex fell less than 2 percent on Friday.

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