The Indian tycoon comes from the top end of the powerful club of the world’s greatest fortunes.
He started the year as the fourth richest man in the world.
For 24 days he took advantage of this symbolic title as one of the most powerful people. He was also the richest man in Asia.
But suddenly the machine went off the rails.
Everything has gone wrong for 60-year-old Indian billionaire Gautam Adani. His fortune, estimated at $119 billion on January 24, is melting at a worrying rate. It is estimated at $59 billion as of February 5, according to the Bloomberg Billionaires Index. In total, Adani lost $60 billion in 2 weeks.
Adani falls out of the Top 20
He has been kicked out of the top 20 billionaires. He is currently 21st, but it wouldn’t be surprising if his decline continued in the coming days.
What happened? How did the man who had a meteor rise in the last two years, to the point of becoming the second richest man in the world last September, he found himself so weakened?
It all started on January 24, when New York investment firm Hindenburg Research released a scathing report on conglomerate Adani after shorting the group’s shares through US-traded bonds and non-US-traded derivatives. India. This meant that the New York-based investment firm, a well-known short seller, was betting on a short-term decline in the prices of these shares.
The short seller claims the conglomerate has used shell companies in tax havens to boost its revenue and manipulate the share prices of its various entities. The report describes a galaxy of shell entities based in the Caribbean, Mauritius and the United Arab Emirates controlled by the Adani family.
“We have uncovered evidence of outright accounting fraud, stock manipulation and money laundering at Adani, which took place over decades,” Hindenburg wrote.
“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,” Hindenburg said.
Adani Group, which owns mines, ports, power plants and data centers in India, rejected the allegations as baseless and threatened to seek all possible legal remedies in Indian courts.
“This is not simply an unwarranted attack on a specific company, but a calculated attack on India, the independence, integrity and quality of Indian institutions, and India’s history of growth and ambition,” Adani Group said. in a 413-page report. on January 29.
Credit rating companies send warnings
But investor confidence in the group has dissipated. Investors are questioning the group’s massive debt and governance issues raised by Hindenburg. The silence of the Government of Prime Minister Narendra Modi, to whom Adani is close, does not help either and contributes to maintaining the fever.
The credit risk rating agency S&P Global Ratings has just lowered the outlook for certain entities of the Adani Group due to concerns about their ability to finance themselves in the coming months.
On February 3, S&P downgraded the rating outlook for Adani Ports & Special Economic Zone and Adani Electricity Mumbai to negative from stable.
“There is a risk that investor concerns about group governance and disclosures are greater than what we have currently included in our ratings,” analysts Mary Anne Low and Chang Jia wrote in a note. “Or that new research and negative market sentiment could lead to increased cost of capital and reduced access to finance for rated entities.”
Moody’s Investors Service also questions Adani’s ability to raise funds and refinance its debt in the coming years.
The two rating agencies left the conglomerate’s financial strength rating intact, but S&P made it clear that it could downgrade it in the short term, which would be a big blow to Adani Group.
Gautam Adani became a billionaire in 2008 after starting a commodity export company. But his real rise came during the covid-19 pandemic.
Last year he surpassed, one after another, the regulars of the rankings of great fortunes such as Warren Buffett and Bill Gates. He managed to dethrone Jeff Bezos from second place. The only person whose fortune had prevented Adani’s rise had been Elon Musk, who clung to the title of the world’s richest man.