Hindenburg Report: Adani Loses His Position, Drops To 11
- Business
Nitin Kapur- 0
- 8 minutes read
Gautam Adani has lost his position (4th) as one of the “World’s Top 10 Richest Men” and is currently holding the 11th position with $84.4 billion. He is just a spot up from his rival Mukesh Ambani, Chairman of Reliance Industries Limited. Ambani currently holds a net worth of 82.2% billion. Also, in just three trading days, the Indian tycoon has experienced a wealth wipeout of $34 billion. The shares of the Adani Group have also nosedived, erasing over $68 billion of market value. All this happened due to the Hindenburg report.
Hindenburg Report And Adani Group
In 2005, Nate Anderson lived in a small Manhattan apartment he barely could afford. In spite of his unusual talents, he came up against a billionaire this week after sniffing out corporate fraud.
His firm, Hindenburg Research, made headlines this week when it announced that it was betting against stocks tied to the Adani Group, an Indian energy and infrastructure conglomerate headed by Gautam Adani, a man whose estimated net worth was greater than Jeff Bezos’, Bill Gates’ and Warren Buffett’s at the beginning of the year.
A Hindenburg report found that Adani’s family members had been using overseas shell companies linked to Adani’s family members to artificially boost the share prices of their firms over several decades. The Indian stock market was overvalued by more than 80% by Adani’s companies, according to Hindenburg.
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Adani Group’s stocks suffered following allegations from the Hindenburg report. Adani Group denied the allegations and threatened Hindenburg with legal action by the end of the week, causing some shares to fall 20% and the companies’ collective market value to drop $51 billion.
Hindenburg’s claims have been dismissed by the Adani group, which issued a 413-page report rejecting its questions, claiming none of them was “based on independent or journalistic fact-finding.” As part of Adani’s response, the company provided documents and data tables, as well as stated that it had followed local laws and made all required regulatory disclosures.
Adani failed to address many of the issues raised by the Hindenburg Report in its response. Adani answered only 26 of 88 questions.
The company mentioned that it stood by its report and “would welcome” litigation from Adani Group. Furthermore, Adani’s business dealings might be revealed by a U.S. legal challenge.
It is far more challenging to take on the Adani Group. The company’s business interests have closely aligned with those of the Indian government, according to its critics, and its founder’s ties to Prime Minister Narendra Modi. Several steps have been taken by Modi’s government to support the coal-related business, which earns most of its revenue from power generation, shipping, mining, and energy transmission.
The Disappearance Of Tens Of Billions Of Dollars In Market Value
The Hindenburg report has raised concerns about much bigger problems and simultaneously prompted the investors to dump shares of Adani Group. As the news goes, since January 25, the flagship company of Gautam Adani, The Adani Enterprises as well as the others in the group have plummeted 20% in just a single day.
Analysts have speculated that if the Hindenburg report’s findings are proven to be true, bank and financial institutions lending to the company could suffer.
The founder of Aveksat Financial Advisory, Mr Aveek Mitra stated that he believes the situation will only cause turmoil for a couple of days. Moreover, he noted that although the Hindenburg report held some key questions about Adani’s stock valuation, that does not mean its entire business and assets are a “sham”.
He stated,
“If shares continue to plunge, Adani as a businessman will need to take that into consideration and see where and how to next invest.”
Furthermore, he added,
“It could also increase scrutiny since lenders may require more assurances which could make the company more careful. But whether this is a setback or a temporary blip for Adani, that is the billion-dollar question.”
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