Shares of most Adani firms took a nosedive on Monday as the group continues to suffer fallout from fraud allegations, with stock losses reportedly hitting a staggering $65 billion.
Last week, New York-based Hindenburg Research published a damning report that accused the Indian conglomerate of artificially boosting the share prices of its firms by using shell companies linked to Adani family members — including founder and chairman Gautam Adani’s older brother, Vinod Adani — in “tax havens,” such as Mauritius, Cyprus and several Caribbean islands. This operation allegedly ran for decades, resulting in a collective overvaluation by more than 85% on India’s stock market.
Many of the Vinod Adani-associated entities have no obvious signs of operations, including no reported employees, no independent addresses or phone numbers and no meaningful online presence. Despite this, they have collectively moved billions of dollars into Indian Adani publicly listed and private entities, often without required disclosure of the related party nature of the deals.”
On Monday, Adani Transmission dropped 14.91%, Adani Green Energy by 20%, Adani Total Gas by 20%, Adani Power by 5% and Adani Wilmar by 5%; flagship Adani Enterprises, however, climbed 4.21% after its follow on public offer (FPO) was subscribed 2%, as per the Times of India.
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Losses in the group’s stock value hit $65 billion, according to Reuters.
The steep losses mark a stark contrast to the dramatic rise of Gautam Adani, who saw more than 1,500% gains in some of his group stocks in the last three years.
The college dropout, who once became the world’s second richest man, has now fallen to No. 7 and No. 8 in the Bloomberg and Forbes Billionaires Indices, respectively. However, he remains Asia’s richest person with a net worth sitting at approximately $88.2 billion (Forbes) to $92.7 billion (Bloomberg).
In its rebuttal, Adani Group called the Hindenburg report “a malicious combination of selective misinformation and concealed facts relating to baseless and discredited allegations to drive an ulterior motive.”
In another statement, it said it is “evaluating the relevant provisions under U.S. and Indian laws for remedial and punitive action against Hindenburg Research.”
Hindenburg, for its part, has welcomed the challenge. “We fully stand by our report and believe any legal action taken against us would be meritless,” said the financial research firm, which previously went after hedge fund Platinum Partners, electric truckmaker Nikola Corporation and social media giant Twitter.
“If Adani is serious, it should also file suit in the U.S. where we operate. We have a long list of documents we would demand in a legal discovery process,” Hindenburg added.