What to know about Gautam Adani and the stock route after the Hindenburg Report

What to know about Gautam Adani and the stock route after the Hindenburg Report
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Indian billionaire Gautam Adani, who briefly became the world’s second-richest person last year, has had a tough week. On Tuesday, Hindenburg Research indicted him on charges of fraud and market manipulation by US-based short sellers, through which he controlled companies worth billions.

The fortunes of Adani, which recently had more wealth than Bill Gates and Warren Buffett, fell by more than $22 billion on Friday. Forbes, which tracks billionaire fortunes in real time Seven publicly traded Adani companies, which are involved in everything from energy and infrastructure, lost more than $50 billion in market value this week. Bloomberg News Report

Hindenburg, which is best known for a 2020 Report on Misrepresentation At electric vehicle company Nicola, the study, published after two years of investigation, said Adani had pulled out “The largest in corporate history.”

The Adani Group, the billionaire’s umbrella holding company, called Hindenburg’s allegations “baseless and infamous,” and suggested that the report was intentionally malicious and that it was time for a sabotage Secondary Selling shares in one of its companies.

Here’s what to know about the allegations surrounding the Indian energy baron, Asia’s richest man.

Adani, 60, had a humble beginning. Born to a textile merchant in the western state of Gujarat, Adani spent his early career as a small-time plastics trader who traveled on a scooter.

His big break came in the early 1990s when India began liberalizing its economy and he was commissioned to build a deep-water port at Mundra, which is now Largest commercial port in the country. From there, his company expanded rapidly into infrastructure, logistics and energy, culminating in its rise to coal-related businesses.

James Crabtree, an India expert who wrote a book on the country’s billionaires, called Adani “humble” in 2018. Australian Financial Review Article

“Both at home and abroad he also took an unsavory view of debt … in a process that positioned him as perhaps the most fiscally aggressive of India’s new generation of billionaires,” wrote Crabtree, who also noted that the tycoon operated from an unassuming office in his own in the state (Adani is also a close ally of Indian Prime Minister Narendra Modi, who previously led Gujarat.)

Adani’s net assets rose sharply, from $9 billion in 2020 to $127 billion in December, amid a broad boom in Indian capital markets. Forbes reported on Friday that he is worth less than $97 billion.

How big is the Adani empire?

Very, very big. Adani’s companies operate major Indian seaports, manufacture cement and sell cooking oil. He has also acquired recently New Delhi TelevisionA leading English-language news channel that is one of the last networks to be seen as journalistically independent.

But coal remains at the heart of his empire and, according to Global Energy Monitor, he is the world’s largest private developer of coal-fired power plants and mines. More than 60 percent of his holding company’s revenue is derived from coal-related businesses, The Washington Post reported in December.

His empire now spans sectors like defence, renewable energy, transmission and infrastructure.

What is Adani’s connection with Narendra Modi?

Adani’s spectacular rise has closely paralleled Modi’s political career. The two men first met in their home state of Gujarat in the 1990s, when Adani was an up-and-coming businessman and Modi was a promising, mid-level bureaucrat in the Bharatiya Janata Party.

Over the decade, Adani has developed relationships with political leaders from across India, but the two seem mixed, aides to both men previously told The Post. A former Modi adviser said the politician oversaw infrastructure improvements when he led Gujarat and came to respect Adani as an efficient operator.

How political will often favors a coal billionaire and his dirty fossil fuels

After Modi was first elected Prime Minister in 2014, he traveled from Gujarat to New Delhi in a private jet. Modi smiled and waved from the stairs, hiding Adani’s purple logo on the back of the plane. (said in an interview with Adani 2016 Economic Times newspaper that the plane was not used by Modi “for free”.)

The Post reported in December that the Indian government had amended the law at least three times to help his coal business, at least saving him $1 billion. Critics such as Australia-based nonprofit Adani Watch said Hindenburg’s allegations, if proven true, are “another example of what happens when crony capitalism and regime favoritism create a perceived culture of impunity.”

An Adani spokesman declined to discuss the billionaire’s political ties when provided with a list of questions ahead of The Post’s December report. An Adani associate, who spoke on condition of anonymity because he was not authorized to comment publicly, told The Post that the billionaire’s success was due to his ability to support Delhi’s economic priorities, such as when India faced shortages and developing ports to transport coal. . Construction of coal plants when the country needs electricity.

What are the allegations of fraud by Hindenburg?

Hindenburg released a report that accused the Adani Group of, among other things, using a network of foreign shell companies linked to Adani family members to artificially inflate the share prices of its companies for decades. Hindenburg argued that Adani’s companies collectively accounted for more than 80 percent of India’s stock market valuation.

Billionaire investor Bill Ackman Tweet Thursday called Hindenburg’s report “highly credible” and “extremely well researched”.

Indian market Some Adani subsidiaries have ceased business After the big sale on Friday.

Adani said it would look into taking legal action against the Hindenburg, which it said it would welcome. the challenge.

The sell-off casts doubt on the fate of an Adani company’s $2.45 billion secondary share sale, which opened on Friday. A market analyst said he was watching to see if the firm would withdraw its offer or lower its asking price.

The sharp decline in share prices means “markets have taken the content of the report seriously,” said Hemindra Hazari, an independent research analyst.

The allegations cast doubt on the integrity of Indian capital markets, said Andy Mukherjee, an Indian economy commentator who writes for Bloomberg Opinion.

“This puts the Indian regulator in a difficult position about what to do next: restore investor confidence by thoroughly investigating allegations of market manipulation, or dismiss India’s rise as the handiwork of jealous foreigners?” he said in an email.

The case also raised questions about the amount of loans India’s public-sector bank had given to Adani. According to Hong Kong brokerage CLSA, about 30 percent of Adani Group’s debt is held by public-sector banks. The firm said the exposure was manageable even as debt at the group’s five largest companies doubled over the past four years to $25.7 billion as of March.

Gerry Shih and Anant Gupta in New Delhi contributed to this report.

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