Gautam Adani’s net worth drops after Hindenburg Research accuses Adani Group of ‘brazen stock manipulation’
Mining tycoon Gautam Adani’s wealth has fallen by $8 billion after a US investment firm accused him of “brutal stock manipulation and accounting fraud”.
Most important points:
- Mr Adani lost nearly 5 percent of his net worth after investors rushed to sell shares
- A Hindenburg Research report claims that Adani’s brother, Vinod, “manages a vast labyrinth of offshore shell entities”
- Adani Group says the allegations are “baseless and discredited”.
Mr Adani, 60, is the third richest person in the world, with an estimated fortune of around $181 billion and holdings ranging from Australian coal mines to India’s busiest ports.
But the magnate was the biggest loser on Forbes’ real-time billionaires list on Wednesday, losing nearly 5 percent of his net worth overnight as investors scrambled to sell shares in his group of companies.
Hindenburg Research published a report alleging that the Adani Group had been “involved in brutal stock manipulation and accounting fraud over decades”.
The company said it had taken a short position in Adani Group companies after a two-year investigation based on interviews with former executives, site visits in multiple countries and document reviews.
According to the report, Adani’s older brother, Vinod, runs “a vast labyrinth of offshore empty entities” in tax havens, including Mauritius, Cyprus and several Caribbean islands.
Hindenburg said it had identified numerous cases of secret related party transactions and profit manipulation “to maintain the appearance of financial health and solvency” of listed Adani companies.
The allegations come ahead of an ambitious $3.5 billion follow-up public offering to be opened for bidding in India, which aims to strengthen the business empire’s balance sheet.
Jugeshinder Singh, chief financial officer of Adani Group, said the release of the report was timed “with the main aim of harming the upcoming public offering”.
“The report is a malicious combination of selective misinformation and outdated, unsubstantiated and discredited allegations,” he said.
Adani critics link the rise of billionaires to the Indian prime minister
Shares in Adani’s business units are up 2,000 percent over the past three years, adding more than $140 billion to the founder’s net worth.
Critics of the billionaire attribute his meteoric rise to close association with Indian Prime Minister Narendra Modi and support for his policies.
According to Hindenburg’s report, there had been a pattern of “government leniency toward the group” for several decades.
“We believe the Adani Group was able to commit a major, blatant fraud in broad daylight largely because investors, journalists, citizens and even politicians were afraid to speak out for fear of reprisals,” the report said.
Shares of flagship Adani Enterprises fell as much as 3 percent on Wednesday before recovering to trade 1.41 percent lower in the afternoon.