Gautam Adani, the founder of Indian industrial conglomerate Adani Group, lost more than $28 billion in just a week after a U.S. short seller accused his businesses of widespread accounting fraud in what it called “the largest con in corporate history.”
Hindenburg Research, a New York City-based investment firm, on Jan. 24 published a report claiming Adani Group has through its seven key companies “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.” The findings were based on two years of investigation that involves interviews, document reviews and site visits, Hindenburg said.
Since then, Adani Group, whose business spans media, energy and defense, has lost more than $70 billion in its market cap on the Mumbai stock exchange. Adani’s personal fortune dropped from $121 billion on Jan. 23, a day before Hindenburg released the report, to $92 billion on Jan. 29, according to the Bloomberg Billionaires Index. Adani’s rank on the rich list fell from No. 3 to No. 7, although he is still the richest person in Asia.
Adani enjoyed astronomical wealth gain in 2022, seeing his fortune balloon from $85 billion to more than $120 billion, largely thanks to stock price appreciation. At the end of 2022, he was the world’s third richest person behind LVMH chairman Bernard Arnault and Tesla CEO Elon Musk.
Adani’s rebuttal to Hindenburg
Adani Group denounced Hindenburg’s allegations as baseless and malicious in its initial response on Jan. 24 a few hours after the report’s release. On Jan. 29, the company issued a 413-page rebuttal accusing the U.S. short seller’s report not only of false accusations against the company, but also a “calculated attack” on India and its economy.
“This is rife with conflict of interest and intended only to create a false market in securities to enable Hindenburg, an admitted short seller, to book massive financial gain through wrongful means at the cost of countless investors,” Adani Group said in the response.
Hindenburg said in last week’s report it has a short position in Adani Group’s companies through U.S.-traded bonds and non-Indian-traded derivative instruments.
“Fraud cannot be obfuscated by nationalism or a bloated response that ignores every key allegation we raised,” Hindenburg responded to Adani in a statement on Jan. 29.