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A company owned by Asia’s richest man, Gautam Adani responded to a report that said the company was “brazen” about stock manipulation and accounting fraud.
The Adani Group, which Gautam Adani started, called the report from the US investment firm “malicious” and “selective misinformation.”
The group’s market value dropped by almost $11 billion (£8.7 billion) after the research was made public on Wednesday.
It is now thinking about taking Hindenburg Research to court in New York.
Adani Group is one of the largest businesses in India. It can be used in many places, like trading commodities, airports, utilities, and clean energy. Forbes magazine says that Mr. Adani, the fourth richest person in the world, is in charge of it.
Hindenburg, on the other hand, is an expert at “short-selling,” which means betting against a company’s stock price in the hopes that it will go down.
In its report, Hindenburg said that Mr. Adani had “pulled the biggest con in the history of business.” This happened just a few days before the public was supposed to be able to buy shares in the Adani Group.
The report asked why the Adani Group-owned companies in tax havens like Mauritius and the Caribbean instead of in Australia. It also said that Adani companies had “significant debts” that put the whole group on “shaky financial ground.”
But on Thursday, Adani Group said it was looking into “corrective and punitive actions” against Hindenburg Research in the US and India.
Adani said it had always “complied with all laws.”
Thursday, Hindenburg responded to Adani’s comments by saying that the company hadn’t answered “a single substantive issue” that Hindenburg had raised.
It also said that it stood by its report and would “welcome” legal action because any claim against it would be “meritless.”
The biggest company in the group, Adani Enterprises, will begin selling shares to the public on Friday.
Political response
Politicians from the opposition, who have said for a long time that Mr. Adani got ahead because he is close to Indian Prime Minister Narendra Modi, responded quickly to the report.
A well-known South Indian politician named KT Ramarao asked India’s investigation agencies and market regulator to look into how the Adani Group does business.
But experts say that regulators are unlikely to act on their own.
The BBC has tried to talk to the market regulator but has not heard back.
Even though it looks like Adani Group will be able to sell $2.4 billion worth of shares to the public on Friday, a financial markets analyst named Ambareesh Baliga said that some investors might want to know more about the claims in the report.
But more than just the Adani Group could be affected by the report.
Andy Mukherjee, a columnist for the news service Bloomberg, said that there were “many questions about the integrity of the larger Indian market,” which is “caught between the pressures of financial globalization and political nationalism.”
He also asked, “Is the Security and Exchange Board of India waiting for a public uproar to clean up the market?”
Who is Gautam Adani?
Gautam Adani comes from a family of cloth merchants who are in the middle class. Still, he never looked back after he started his firm to trade in commodities in 1998. Over the next 24 years, his companies grew into ports, mines, railroads, infrastructure, power, and real estate. This was made possible by taking on more debt. One commentator said that this made him “perhaps the most aggressive of India’s new generation of tycoons.”
Today, Gautam Adani is, without a doubt, India’s infrastructure tycoon. He is in charge of India’s second-largest cement company, as well as seven airports and 13 ports, including the country’s largest port in the town of Mundra on the western coast. He is also building India’s longest expressway, which will connect the country’s commercial capital, Mumbai, to Delhi.
Mr. Gautam Adani owns the biggest private power company in India. He has six power plants that run on coal. At the same time, he promised to invest $50 billion in green hydrogen and is in charge of an 8,000-kilometer-long natural gas pipeline. He is also the owner of coal mines in Indonesia and Australia. He wants to be the world’s biggest player in renewable energy by 2030.
James Crabtree, a policy analyst, says in his book The Billionaire Raj: Journey Through India’s New Gilded Age that Mr. Adani grew as quickly and as big as industrial giants from the past.
Gautam Adani has been a big problem all along. Critics say that because he was close to Narendra Modi when he was chief minister of Gujarat and is still close to him now that he is India’s prime minister, his business empire is an example of crony capitalism.
In Queensland’s Galilee Basin, people for and against coal went to a coal mine owned by Adani to fight. Environmental approvals took years, so the final building didn’t start until 2019. A non-profit group in Australia called AdaniWatch runs a website that says it will “shine a light on the bad things the Adani Group has done all over the world.” The Adani Group has said that it did not break any Australian laws.
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In 2012, India’s government auditor said that Mr. Modi, who was chief minister of Gujarat at the time, gave cheap fuel from a state-run gas company to Gautam Adani and other business people. In 2017, a journalist wrote a series of articles saying that Mr. Modi did a good job taking care of Mr. Adani’s businesses. These claims have been denied repeatedly by both Mr. Adani’s companies and Mr. Modi’s government.
RN Bhaskar, who wrote a new biography of Mr. Adani, says that he was able to build and keep relationships, which helped his businesses grow. He has a lot of “political and social leaders” as friends. The main opposition party, Congress, was in charge when Mr. Adani’s port project in Kerala was approved, and the Communists, who are now in charge of the state, favored it.
