Last year, Gautam Adani, 60, was the star of all the rankings of the world’s greatest fortunes.
He was one of the few billionaires to see his net worth soar as the global economic downturn rattled the fortunes of tech moguls.
Adani, unknown to the West, saw his fortune increase by $40 billion, according to calculations by the Bloomberg Billionaires Index during a year in which Tesla CEO Elon Musk (TSLA) – Get a free reportand Jeff Bezos, founder and president of Amazon (AMZN) – Get a free report they have suffered some of the greatest losses.
Mark Zuckerberg, the CEO of social media giant Meta Platforms (GOAL) – Get a free report he had been kicked out of the top 20 billionaires.
Asia’s new richest man, Adani saw his rise through the elite club of billionaires as an opportunity to develop his empire globally and make a name for himself on the international stage. Therefore, this year should be the year of this strategy. But instead of the coronation he had planned, Adani has been trapped in a veritable nightmare since January 24. This nightmare could have major consequences for his global expansion ambitions.
serious accusations
New York investment firm Hindenburg Research announced on January 24 that it has shorted shares of the Andani conglomerate through US-traded bonds and non-Indian-traded derivatives.
This means that Hindenburg Research, a well-known short seller, is betting on a near-term drop in the prices of these shares.
The short seller explained that the bet stems from alleged illegal practices by the Indian tycoon’s conglomerate.
“We have uncovered evidence of outright accounting fraud, stock manipulation and money laundering at Adani, which took place over decades,” Hindenburg wrote in a statement. report.
“Adani has accomplished this mammoth feat with the help of enablers in the government and a cottage industry of international companies that facilitate these activities.”
The report describes a galaxy of fictitious entities based in tax havens (the Caribbean, Mauritius and the United Arab Emirates) controlled by the Adani family.
The Adani Empire has denied all of these accusations and has threatened to use the legal process to defend itself.
“The maliciously mischievous uninvestigated report released by Hindenburg Research on January 24, 2023 has negatively affected Adani Group, our shareholders and investors,” Adani Group chief legal officer Jatin Jalundhwala said in a statement on January 26.
“We are evaluating the relevant provisions of US and Indian law to take corrective and punitive action against Hindenburg Research,” he continued.
Adani falls in the ranking
But Hindenburg, who is credited with the downfall of Trevor Milton, the founder of electric truck maker Nikola, doubled down.
“Regarding the company’s threats of legal action, to be clear, we would appreciate it,” the short seller reacted. “We fully respect our report and believe that any legal action taken against us would be without merit.”
So far, investors seem to believe Hindenburg more than Adani Group’s denials.
The Adani empire has lost a total of $51 billion in market capitalization over the last two trading sessions following the allegations. Adani Enterprises, the flagship of this empire, for example, lost almost a fifth (more than 19%) of its value on January 27. Units such as Adani Green Energy and Adani Total Gas plunged 20%, the daily limit allowed. Adani Power lost 5%. Adani Port’s share price fell 13.8% and Adani Transmission fell 19.47%.
As Adani’s net worth is tied mostly to his holdings in these various entities, his fortune has also shrunk by more than a fifth in just three days. She was worth $119 billion on January 24, according to Bloomberg Billionaires Index. But as of January 27, the Indian tycoon was worth just $92.7 billion. Thus, he lost $26.3 billion in three days, or 22% of his fortune melted in 72 hours.
Adani has slipped down the rankings and now stands as the seventh richest person in the world after starting the year in fourth place. If she can’t convince investors very quickly that Hindenburg’s accusations are unfounded, she risks finding herself out of the top 10 in days to come.
The group has promised a detailed response to the short seller’s allegations. But no release date has been officially announced.
