The $100bn market rout: That’s the amount wiped off the value of Indian conglomerate Adani Group after attack by short-seller
One of the world’s richest tycoons has seen more than $100billion wiped off the value of his business empire in just over a week.
Indian business mogul Gautam Adani, the university dropout turned billionaire, became the wealthiest person in Asia through the success of his Adani Group.
But the conglomerate, whose operations span commodities trading, ports and energy, was last week rocked by a damning report by short-seller Hindenburg Research.
After a two-year investigation, New York-based Hindenburg accused it of ‘pulling the largest con in corporate history’ – claims that sent shares across the Adani Group into free fall.
The ten listed companies controlled by the conglomerate plunged almost 50 per cent on the stock market in Mumbai.
Short-seller attack: Indian business mogul Gautam Adani (pictured), has seen more than $100bn wiped off the value of his business empire in just over a week
That has wiped a total of $108billion – or £88billion – off the value of the conglomerate since the attack on January 24.
Adani, who last year became the world’s second-richest man with a £120billion fortune, has seen his own personal wealth fall by close to £50billion.
The 60-year-old married father of two broke his silence yesterday, insisting: ‘Our balance sheet is healthy and assets robust.’ But he faces an uphill struggle to turn the situation around.
In its devastating report, Hindenburg accused the Adani Group of stock price manipulation and accounting fraud.
The report highlighted alleged improper use of offshore tax havens, as well as sounding alarm bells over high debt and the valuations of the public companies.
The group has slammed the report as ‘a malicious combination of selective misinformation and stale, baseless and discredited allegations’.
It lambasted the research firm as launching a ‘calculated attack on India’ and said the report’s conclusions emanated from an ignorance of Indian law.
However, its 413-page rebuttal did not soothe investors’ nerves, and the Adani Group yesterday abandoned a £2billion fundraising designed to shore up the conglomerate.
It marked a humiliating U-turn after it had attracted strong support from investors for the share sale.
The group said the £2billion raised from India’s largest ever secondary share offering would be returned to investors.
Mr Adani said: ‘Given these extraordinary circumstances, the company’s board felt that going ahead with the issue will not be morally correct. For me, the interest of my investors is paramount and everything else is secondary.
‘Hence to insulate the investors from potential losses, we have withdrawn the sale.’
He said the setback will ‘not have any impact on our existing operations and future plans’.
Regulators are now poring over the chaos with the Securities and Exchange Board of India probing the stock market rout.
India’s central bank has asked local lenders about their links to the conglomerate, estimating banks were exposed to around 40 per cent of £20billion group debt.
Both Adani and Hindenburg have stuck to their guns, meaning ‘battle lines are now drawn’, according to Russ Mould, investment director at AJ Bell.
‘Whoever loses is going to get hurt and right now the share price collapse and multi-billion decline in stock market valuations means it is Adani and its controlling family that is currently on the back foot,’ the analyst said.
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