The value of India’s Adani conglomerate fell to over $100 billion on Thursday, following a report by short-seller Hindenburg Research. The report caused market turbulence and prompted the company to cancel its public share sale. By 10 a.m. London time on Thursday, the losses across Adani’s main businesses reached $107 billion since the publication of Hindenburg’s critical report on January 24th. Hindenburg has disclosed that it holds a short position in Adani Group companies.
The Hindenburg Research report, which claimed to be the result of a two-year investigation, accused the Adani conglomerate of participating in “a prolonged stock manipulation and accounting fraud scheme.” Adani vehemently denied the allegations, calling them “falsehoods” from the “Madoffs of Manhattan.” The company’s 413-page response did not calm investors and the rapid sell-off continued.
In the Adani response, it was expressed that it was concerning that the statements made by an entity located far away with no credibility or ethics had caused serious harm to their investors. The response referred to Hindenburg as an unethical short seller. It was also mentioned that Hindenburg did not publish the report for any altruistic reasons, but for their own selfish motives and in violation of applicable securities and foreign exchange laws.
Hindenburg retorted on January 29th that the Adani commentary had predictably tried to divert attention from the substantive issues and instead, had fueled a nationalist narrative by claiming that the report constituted a calculated attack on India.
Gautam Adani was downgraded from Forbes’ Top 10 list of the wealthiest individuals in the world. The rapid decline in the value of Adani Group’s shares has raised concerns about potential risks to the Indian markets. According to Reuters, India’s central bank has requested local banks to provide information about their exposure to the Adani conglomerate, citing government and banking sources.
Due to “unprecedented” market conditions and significant fluctuations in the daily stock price, Adani Enterprises canceled its $2.5 billion follow-on public offering (FPO) on Wednesday. In a statement, Adani stated that the interests of the investors were of utmost importance and to protect them from potential financial losses, the Board had decided to not proceed with the FPO. Despite having achieved full subscription, the shares of Adani Enterprises declined by 26.7% during Thursday’s trading session, with Adani Ports dropping by 6.6%, Adani Green and Adani Transmission each experiencing a 10% loss.