New York short-selling firm Hindenburg Research has accused Adani Group, one of India's largest conglomerates, of fraud, price manipulation, and illegal practices.
Who is Gautam Adani？
Gautam Adani is an Indian businessman and the founder of the Adani Group. He had leaped into the global elite of billionaires in 2022 and was planning to expand his influence overseas. According to Bloomberg Billionaires Index, Gautam Adani had been one of the dew billionaires to have seen his net worth increase in 2022, earning $44 billion. His fortune used to reach $150 billion once. However, Gautam Adani, the former richest man in Asia has faced a catastrophic crisis now. Gautam Adani has lost his crown as India's richest man following a sharp fall in its share price and a probe by Indian regulators, his company has decided to withdraw plans for a record secondary offering.
Gautam Adani(Reuters)
Crisis
According to the report, since Hindenburg's accusations were published, a few days later, the entities that make up the Adani conglomerate lost a total of $90 billion in market capitalization. Hindenburg states “We have uncovered evidence of brazen accounting fraud, stock manipulation, and money laundering at Adani, taking place over the course of decades…”
On Feb. 1 Adani Enterprises, the flagship of the Adani empire closed with a 28% plunge on the Mumbai Stock Exchange. The day before, however, Adani Enterprises had successfully raised $2.5 billion.
The share sale was fully subscribed. Investors who bought Adani Enterprises shares did so in a price range between 3,112 rupees and 3,276 rupees.
But 24 hours later, Adani Enterprises shares closed at 2,135.35 rupees, 31.4% to 35% below the price offered in the follow-on offering. This means that all the investors who took part in the transaction had already suffered significant losses just a few hours after they invested.
“Today the market has been unprecedented, and our stock price has fluctuated over the course of the day,” the company announced in a statement on Feb.1.
Adani Group (Reuters)
About Adani Enterprises Ltd
Adani Enterprises is the most important publicly traded unit of Adani Group, one of Indias largest business organizations. For many years, Adani Enterprises has focused on building emerging infrastructure businesses, contributing to nation-building, and divesting them into separate listed entities.
This company said on Wednesday that it had decided not to move forward with plans for a public share offering, saying it was seeking to refund funds from the placement of shares held in escrow. The company's statement said:
“Given the unprecedented situation and current market volatility, the Company aims to protect the interests of the Company's investors by returning the funds received in the secondary offering and withdrawing the completed transactions.”
The Indian regulator starts the investigation into the billions of Adani share wipeout.
India's market regulator is investigating in the shares of billionaire Gautam Adani's companies. As It has been only a week since Hindenburg Research, an American company, published a lengthy short note accusing Adani of running “the biggest scam in corporate history”. In just one week, Adani lost more than $40 billion of his wealth, more than any other billionaire on the list.
The Securities and Exchange Board of India (SEBI) is also looking into several of the allegations made by Hindenburg Research, and into any potential irregularities in a key share sale by the flagship Adani Enterprises on Tuesday. Hindenburg accused Adani Group last week of using offshore tax havens and stock manipulation. It also raised concerns about high debt and the valuations of the seven listed Adani companies.
Adani group has denied the allegations, saying the short-sellers narrative of stock manipulation has “no basis” and stems from an ignorance of Indian law. It has always made the necessary regulatory disclosures, it added.
With shares in Adani Enterprises plunging 28% and Adani Ports and Special Economic Zone dropping 19%, the worst day on record for both.
Conclusion
Gautam Adani, the billionaire once second only to Musk in wealth, is taking an unprecedented hit. His empire is also undergoing a severe U-turn because of the current issue. Adani's U-turn is not only a blow to India's national economy but also the entire South Asian market. WikiFX will keep an eye on the situation and stay tuned.
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