MILANO – A scandal is engulfing Asia’s richest man, affecting China Bombay Stock Exchange. It is the Indian group Adani and its owner, Gautam Adani: Shares fell 15% on the Bombay Stock Exchange, with a listing suspension. Movement followed by the subsidiary Adani Total Gas, down by 20% and already suspended.
What is happening around the Adani empire, so as to generate a loss in value of more than 50 billion dollars in two market days? At the origin of the tumultuous movement is a report by the activist fund Hindeburg Research, an American short seller who bets downwards on the companies whose flaws he has unearthed.
The whirlwind started last Wednesday, when Hindeburg accused the third richest man in the world of fraud. The fund – which in its drawer already has the scalps of Nikola e Lordstown Motors and has also shorted in the past Twitter – went straight down: “We have uncovered evidence of an accounting front, securities manipulation and money laundering in Adani over decades,” he wrote in a statement reported by the American media.
However, the fact was amplified because the research company is not the first to raise doubts about the Adani group, whose interests range from food to energy. In the last months CreditSights he had warned about the excessive leverage of the group. Hindeburg pointed the finger at both the Indian conglomerate’s debt levels and the use of offshore tax havens to rouge balance sheets.
“This story strikes at the heart of the Indian corporate sector, where the scene is dominated by a handful of conglomerates controlled by entrepreneurial families,” Gary Dugan, CEO of the Global CIO Office, told the Bloomberg agency. “They are opaque by nature,” he added, noting how global investors must necessarily come up against the problem of their governance.
Adani’s group – which meanwhile on the Bloomberg Billionaires Index has seen its assets slip below 100 billion dollars – counterattacked on the report published by the New York institute and Jatin Jalundhwala, head of the law firm of the group of Ahmedabad, said it would launch actions in both India and the United States to seek compensation for the damages it suffered. In a statement, the company’s lawyers define Hindenburg Research’s action as an “intentional and reckless attack by a foreign entity” and underline “the objective of sabotaging the offering of securities for public subscription”. In fact, the group is planning a public offer of 2.5 billion to raise capital and repay some debts. “The volatility in the Indian stock market created by the scathing and inaccurate report is causing concern and upsetting Indian citizens,” the group defended.