Gautam Adani considers legal action over ‘baseless’ Hindenburg’s fraud claims

New Delhi

India’s Adani Group denounced Hindenberg Research’s fraud allegations as “baseless” and a “malicious combination of selective misinformation” and is considering legal action against the US-based short seller. I’m here.

Hindenburg Research released Tuesday an investigation into billionaire Gautam Adani’s sprawling conglomerate, denouncing “decades of brazen stock manipulation and accounting fraud schemes.”

Hindenberg said he takes short positions in Adani Group companies “through bonds traded in the US and derivatives products not traded in India.” Short sellers try to make a profit by betting that the stock price of a target company will fall.

Adani’s business empire includes seven publicly traded companies in sectors ranging from ports to power plants, and shares of most of them fell by more than 3% to 8% on Wednesday.

This plunge had an immediate impact on the billionaire’s net worth. Adani lost about $6 billion on Wednesday, according to Bloomberg’s Billionaires Index. He is currently worth $113 billion. Indian markets are closed on Thursday.

In a survey compiled by Hindenburg, the research firm questioned the Adani company’s “extremely high valuation” and said the “substantial debt” put the entire group in a “precarious financial position.”

The research firm concluded the report with 88 questions for the Adani Group. These range from asking for details of Adani’s offshore entity to why it has “such a complex and interconnected corporate structure.”

CNN did not confirm the report’s allegations, and the Indian stock market regulator did not immediately respond to a request for comment.

Adani’s company’s stock has skyrocketed in recent years, making him the richest man in Asia.

In a statement issued hours after Hindenburg released its report, Adani Group Chief Financial Officer Jugeshinder Singh said Hindenburg had not “contacted us or attempted to verify the facts”. He said the claims made by short sellers were “banal, baseless and discredited.”

The conglomerate has faced scrutiny from Indian authorities in the past.In 2021, after The Economic Times reported that a foreign fund holding billions of dollars worth of shares had been frozen by the country’s National Securities Depository. Stocks in Adani’s company plummeted. Adani Group called the report “blatantly false”.

Nate Anderson, founder of Hindenburg Research, has made a name for himself over the past few years by targeting companies that he believes are overvalued or whose financial health is questionable. Anderson is best known for chasing the electric truck company Nikola in 2020, calling it a “complicated scam” that sent the company’s stock price plummeting. In 2022, Nikola’s founder was found guilty by a US jury of lying to investors about the company’s technology.

However, some have accused Hindenburg of trying to push the stock price down with research reports to make a profit.

Adani Group Report Coming in sensitive times. Later this week, the conglomerate’s flagship Adani Enterprises aims to raise his 200 billion rupees ($2.5 billion) by issuing new shares.

“The timing of the report’s issuance clearly betrays a brazen and malicious intent to damage the Adani Group’s reputation, primarily to undermine its subsequent public offering,” Singh said. said.

The conglomerate We are also looking at bringing five new businesses to the stock market over the next two to five years.

In a separate statement on Thursday, the Adani Group said it was “assessing relevant provisions under US and Indian law for corrective and disciplinary action against Hindenburg Research.”

He added that he was “deeply concerned” by the impact of the Hindenburg report on the Group, its shareholders and investors., and by “undesired suffering caused to Indian citizens”.

Adani dropped out of college to become a self-made businessman, according to Bloomberg’s Billionaires Index. He is also seen as a close ally of India’s current prime minister, Narendra Modi.

The 60-year-old mogul founded Adani Group over 30 years ago. Today, we have established operations in a wide range of industries, from logistics to mining, and are growing aggressively in various sectors such as media, data centers, airports, and cement.

But this isn’t the first time analysts have expressed concern that the rapid expansion of his business is fraught with significant risks. one of the most indebted businesses in

Last year, Fitch Group-owned research firm CreditSights released a report on the Adani Group titled “Severe Excess Leverage,” in which it expressed serious concerns about its debt-financed growth plans.

Adani Group told CreditSights in a 15-page report that its companies’ “leverage ratios” “remained healthy and in line with industry benchmarks in their respective sectors” and “has been consistently de-leveraging. ‘ said. in the last nine years.

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