Gautam Adani, Asia’s richest man, accused of “largest con in corporate history”

A report by notorious short-selling research firm, Hindenburg Research, has made explosive accusations against billionaire Indian industrial magnate, Gautam Adani.

The report was published online before markets opened in India where numerous companies linked the Adani Group, founded by Gautam Adani, trade. It had an instant impact, with close to US$9.5 billion in combined market value wiped from seven Adani-linked companies named in the report.

Gautam Adani
Seven Adani-linked companies listed in India, where named in the Hindenburg Research report. Image: Hindenberg Research

Hindenburg said its report is the culmination of a 2-year investigation into the US$218 billion Indian conglomerate.

“Our research involved speaking with dozens of individuals, including former senior executives of the Adani Group, reviewing thousands of documents, and conducting diligence site visits in almost half a dozen countries,” says the report.

“Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations.”

Key criticisms

Much of the short report centres around debt-fuelled growth. With Hindenburg noting “near term liquidity pressure”.

It also criticises close family ties and dealings within the Group, tax considerations, unusual shell company structures, and questionable company auditors.

“We have uncovered evidence of brazen accounting fraud, stock manipulation and money laundering at Adani, taking place over the course of decades. Adani has pulled off this gargantuan feat with the help of enablers in government and a cottage industry of international companies that facilitate these activities,” the report states.

In disclosures, Hindeburg notes it has taken short positions in Adani-linked companies via U.S.-traded bonds and non-Indian-traded derivative instruments.

Asia Markets is not suggesting any of the report’s claims have, or can be, substantiated.

Adani “shocked” by report

The report was released ahead of a share offer by Adani Enterprises which was supposed to be launched on Friday. Adani was hoping to raise up to US$2.5 billion.

The CFO of Adani Group Jugeshinder Singh, issued a statement to media on Wednesday.

“We are shocked that Hindenburg Research has published a report on 24 January 2023 without making any attempt to contact us or verify the factual matrix. The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts,” said Singh. 

“The timing of the report’s publication clearly betrays a brazen, mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming follow-on Public Offering from Adani Enterprises,” it added.

“The Group has always been in compliance with all laws.”

Gautam Adani – a self-made billionaire – is widely considered to be one of Asia’s and the world’s greatest entrepreneurial success stories.

The Adani Group’s main interests are in ports, energy, mining, steel making, infrastructure and food processing.