Hindenburg Research, a US-based investment research firm, accused the Adani group of engaging in “a brazen stock manipulation and accounting fraud scheme” on Wednesday. It also accused the conglomerate of abusing offshore tax havens and raised concerns about the group’s massive debt.
The market value of Adani group companies fell by Rs 85,761 crore after Hindenburg issued the report and stated that it had taken short positions in the group’s stocks.
The Adani group dismissed the report, calling it a “malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts”.
Hindenburg Research’s allegations came just two days before the launch of the Rs 20,000-crore FPO. The anchor investors’ book, which opened on Wednesday, received demand worth Rs 9,000 crore from leading financial institutions, compared to a share allocation of Rs 6,000 crore.
Hindenburg accused Adani family members of establishing and managing “a vast labyrinth of offshore shell entities” in tax havens such as Mauritius, Cyprus, and the United Arab Emirates. According to the report, some of these entities were used for market manipulation. The report identified 38 Mauritius-based entities controlled by Vinod Adani, billionaire Gautam Adani’s elder brother, and his close associates.
Our response to Adani: pic.twitter.com/6NcFKR8gEL
— Hindenburg Research (@HindenburgRes) January 26, 2023
“The timing of the report’s publication clearly betrays a brazen, mala fide intention to undermine the Adani group’s reputation with the primary goal of harming Adani Enterprises’ upcoming follow-on public offering,” Jugeshinder Singh, Adani group’s chief financial officer, said in a statement.
Click here to read the Hindenburg report
What did the Hindenburg report say about Adani?
The report by Hindenburg Research, released on January 24, 2023, suggested that Adani Group was “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades”.
Revealing the findings of its “two-year investigations”, Hindenburg said companies under the Gautam Adani-owned conglomerate “have taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing”.
Also Read: India’s Richest 1% Own More Than 40% Of Country’s Total Wealth: Report
The report also said that Adani Group’s seven key listed companies have a “85 per cent downside purely on a fundamental basis owing to sky-high valuations”. Furthermore, the group was accused of fraud and stock manipulation in the report.
The report sparked widespread panic in domestic stock markets, with listed Adani Group companies plummeting precipitously. This resulted in a nearly 1% drop in the benchmark equity indices Sensex and Nifty.
“We are shocked that Hindenburg Research published a report on January 24, 2023, without making any attempt to contact us or verify the factual matrix,” Adani Group CFO Jugeshinder Singh said.
“The report is a malicious mash-up of selective misinformation and stale, baseless, and discredited allegations that have been tested and rejected by India’s highest courts,” he said.
We have included 88 questions in the conclusion of our report.
If Gautam Adani truly embraces transparency, as he claims, they should be easy questions to answer.
We look forward to Adani’s response.https://t.co/JkZFt60V7f
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— Hindenburg Research (@HindenburgRes) January 25, 2023
According to the Hindenburg report, the Adani Group engaged in “accounting fraud, stock manipulation, and money laundering” for decades. “Adani has pulled off this gargantuan feat with the help of enablers in government and a cottage industry of international companies that facilitate these activities,” Hindenburg wrote in the report, which was based on two years of investigation, conversations with former and senior executives of the company, a review of thousands of documents, and site visits in multiple countries.
