Adani, Asia’s Richest Man, Targeted In $68 Billion Stock Market Crash

(CTN NEWS) – SINGAPORE – Asia’s richest man, Gautam Adani, saw his firms lose $68 billion in market value due to accusations that he had “pulled the greatest fraud in corporate history”.

Made by the short-selling company Hindenburg Research, which led to a significant decline in the price of Adani stock.

The second-largest conglomerate in India was the target of a report last week from a U.S.-based company called Hindenburg accusing it of stock price manipulation.

And fraud just before the company started a $2.5 billion share offering.

According to Bloomberg’s Billionaire Index, Adani, 60, has dropped from the third richest man in the world to eleventh place as his net worth decreased by more than $30 billion to an estimated $84 billion.

GAUTAM ADANI, WHO IS HE?

Adani, a middle-class Ahmedabad native, dropped out of college to work as a diamond trader in Mumbai, the nation’s financial hub.

Before founding Adani Enterprises, which continues to be his primary business, he began importing plastics in the 1980s and traded everything from shoes to buckets.

When India’s economy opened up in the 1990s, tens of millions of people escaped poverty, and the country experienced economic growth, which led Adani to place bets on coal and infrastructure.

Gujarat’s Mundra port, Adani’s first significant undertaking, debuted in 1998 and is India’s largest port.

The largest private port operator in India is Adani Ports, and Special Economic Zone Ltd. Adani rose to the position of leading coal mine developer and operator in India within a decade.

According to the website of Adani Power, it has grown to Australia and Indonesia and is on pace to become “one of the largest mining conglomerates in the world.”

The Adani Group of Companies manages major metropolitan airports, constructs highways, produces power, makes defense gear, develops agricultural drones, sells cooking oil, and has a media station.

Despite having a history with fossil fuels, the billionaire, Adani Green wants to overtake all other renewable energy producers by 2030.

HOW ADANI GOT TO BE THE RICHEST MAN IN ASIA?

As share prices for his publicly traded companies rose in recent years, Adani’s net wealth increased by nearly 2000%.

According to his detractors, many of his supporters are connected to the government and Prime Minister Narendra Modi, who has occasionally used an Adani plane for political campaigns.

They claim that the government changed the procedures for bidding to make it simpler for Adani to obtain contracts, like those to run airports.

The business disputes this, claiming that contracts were obtained fairly and transparently.

Adani was friends with the opposition Congress Party, which ruled Gujarat state when many of his early projects got off the ground before Modi’s election.

According to R N Bhaskar, a writer who authored a biography on Adani, the businessman has been “connected to every politician in power.”

Adani’s admirers claim that by investing in crucial sectors like agriculture, military, and renewable energy, he has successfully coordinated the group’s interests with the government’s.

Additionally, his international initiatives in strategically significant nations like the close neighbor Sri Lanka assist New Delhi in competing with Beijing in the region.

THE ADANI GROUP LOST $68 BILLION; WHY?

Following the release of Hindenburg Research’s research last week, companies in the Adani Group reportedly lost approximately $68 billion, according to Bloomberg.

The short-selling company claims to have spent two years looking into the Adani group and concluded that the seven companies listed under the Adani name were overvalued with an “85% negative risk.”

Thousands of documents, evidence from former Adani executives, and other studies were cited in the report.

The company is accused of stock price manipulation, accounting fraud, and other violations.

According to the study, the Adani Group allegedly exploited offshore shell firms connected to Adani’s family to boost stock prices. It asked Adani to respond to 88 questions.

Nathan Anderson’s five-year-old company Hindenburg gained notoriety in 2020 when it charged Nikola, a manufacturer of electric vehicles, with lying and misrepresenting its technology.

The founder of Nikola was convicted of fraud last year.

In a 413-page report, the Adani group refuted Hindenburg’s claims and claimed that none of its inquiries were “based on independent or journalistic fact research.”

Adani’s answer contained documents and data tables and stated that the company had complied with local laws and completed all relevant regulatory disclosures.

In response, Hindenburg claimed that Adani had addressed only 26 of its 88 queries and several of the issues it identified.

Adani has stated that it was thinking of filing a lawsuit. Hindenburg applauded the proposal and suggested that it might gain access to papers about Adani’s business transactions through a legal fight in the United States.

VANISHING OF BILLIONS IN MARKET VALUE

Investors sold off Adani Group shares due to the Hindenburg report, which stoked worries about bigger issues.

Adani Enterprises, the group’s main company, and other members have experienced a 20% drop in a single day since Jan. 25.

According to several analysts, financial institutions and banks the group has borrowed from could suffer if the worries mentioned by Hindenburg were accurate.

However, Aveek Mitra, the company’s creator, asserts that he thinks the scenario would only result in “a few days of turbulence.”

Although Hindenburg has expressed significant concerns about the stock values of Adani, he insisted that this does not imply that the company’s whole operations or holdings are “a farce.”

As of late Tuesday, the share sale for Adani Enterprises was completely subscribed, indicating the company still has backing. However, three Adani companies’ shares were down 5 to 10%.

Adani, as a businessman, will need to examine this if shares continue to fall and determine where and how to make his next investment, according to Mitra.

Since lenders would demand greater assurances, “it could also heighten scrutiny and make the organisation more cautious.” But the million-dollar issue is if this is a setback or merely a hiccup for Adani.

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