Adani Group has accused a US investment firm of launching a “deliberate attack” on India after publishing a report alleging widespread fraud at the ports-to-power conglomerate.
Hindenburg Research last week released a report on billionaire Gautam Adani’s business, accusing the group of Or “a brazen scheme of stock manipulation and accounting fraud over decades.” The firm said it held short positions in Adani group companies, meaning it would benefit from a fall in the value of those companies.
Adani’s business empire has lost more than $70 billion in stock market value since the Hindenburg report. The infrastructure tycoon’s net worth also plummeted by about $30 billion, according to the Bloomberg Billionaires Index.
He remains Asia’s richest man, with a personal fortune of more than $92 billion, $10 billion more than Indian entrepreneur Mukesh Ambani.
Adani Group, which had already condemned the Hindenburg report as “baseless” and “malicious” in its initial response hours after the report’s publication, said on Thursday that it was considering legal action.A lengthy and angry rebuttal of more than 400 pages followed on Sunday, in which Calling Hindenburg’s allegations “baseless and discredited” and saying the research firm had “ulterior motives.”
“This was rife with conflicts of interest for the sole purpose of creating a sham securities market in which Hindenburg, an established short-seller, could improperly obtain enormous financial gain at the expense of countless investors,” it said.
The 60-year-old tycoon, who founded the Adani Group more than 30 years ago, is considered a close ally of India’s current prime minister, Narendra Modi.
Markets had been cheering the businessman and his suffocating pace of expansion before the Bombay Stock Exchange continued its plunge on Monday. Investors are betting on the self-made industrialist’s ability to grow businesses in areas Modi has prioritized.
In a detailed response on Sunday, Adani Group described the U.S. short-seller report as an “attack” on India, its economy and investors.
“This is not just an unprovoked attack on any particular company, but a deliberate attack on India, the independence, integrity and quality of Indian institutions, and India’s growth story and ambitions,” it said.
Hidenburg concluded its report last week with 88 questions for the Adani Group. The questions included asking for details of the group’s offshore entities and why it had “such a complex, interconnected corporate structure”.
The Indian conglomerate called the issues “rhetorical insinuations that color rumors with facts”. It then tried to answer them, publishing some tables and graphs to support its position.
The lengthy rebuttal sought to reassure investors about the group’s debt, banking relationships and corporate governance practices. Shares in the group’s flagship Adani Enterprises rose more than 4 percent on Monday, but most Adani shares extended last week’s losses.
The group’s chief financial officer, Jugeshinder Singh, likened the Indian market’s reaction to one of the most horrific events in the country’s colonial history under British rule.
“In Jallianwala Bagh, only one British gave the order, and the Indians shot at other Indians. So am I surprised by the behavior of some of my fellow Indians? No,” Singh told The Times in an interview published on Monday. Mint Business Daily.
British Brigadier General Reginald Dyer ordered his soldiers to open fire without warning on a peaceful protest of thousands of unarmed people in Jallianwala Bagh, a public garden, April 13, 1919 in the city of Amritsar. After 10 minutes, when they ran out of ammunition, they stopped firing. This horrific event is now known as the Jallianwala Bagh or the Amritsar Massacre.
Hindenburg’s statement comes at a sensitive time For Adani. He aims to raise 200 billion rupiah ($2.5 billion) by issuing new shares in Adani Enterprises this month. Offers will close on Tuesday.
Hindenburg responded to Adani’s rebuttal by saying that “nationalism must not be confused with fraud”.
“Adani Group is trying to conflate its meteoric rise and the wealth of its chairman Gautam Adani with the success of India itself,” Twitter Sunday.
Hindenburg went on to add that the group ignored “every single critical allegation we made.”
“In terms of substance, Adani’s 413-page response consists of only about 30 pages, focusing on issues relevant to our report,” it said.
“The remaining responses included 330 pages of court records, and 53 pages of high-level financial information, general information, and details of unrelated corporate initiatives, such as how it encouraged women to start businesses and produce safe vegetables.”