Last year, Gautam Adani, 60, was the star of the world’s biggest wealth rankings.
He was one of the few billionaires who saw their fortunes grow exponentially as the global economic downturn shook the fortunes of tech investors.
Tesla CEO Elon Musk’s wealth has increased by $40 billion according to the Bloomberg Billionaires Index. (TSLA) – Get a free reportand Jeff Bezos, founder and chairman of Amazon (AMZN) – Get a free report They suffered some great losses.
Mark Zuckerberg, CEO of the giant social networking platform Meta (META) – Get a free report He was kicked out of the top 20 billionaires.
Adani, the new richest man in Asia, then saw his addition to the elite club of billionaires as an opportunity to develop his empire and make his name internationally. So this year should be the year of this strategy. But instead of the crown he had planned, Adani has been caught in a real nightmare since January 24. This fantasy can have an important effect on his ambitions of international expansion.
Serious accusations
New York investment firm Hindenburg Research announced on January 24 that it has shorted Andani Congress shares in US-traded bonds and non-Indian derivatives.
This means that popular short-seller Hindenburg Research is betting on a short-term decline in the price of these stocks.
The short seller said the bets stemmed from an alleged illegal scheme against a wealthy Indian conglomerate.
“We found evidence of brazen accounting fraud, stock manipulation and money laundering at Adani over decades,” Hindenburg wrote in the report.
“Adani has embarked on this gargantuan adventure with the help of government and cottage industry international companies that facilitate these activities.”
The report describes a galaxy of shell entities based in tax havens — the Caribbean, Mauritius and the United Arab Emirates — controlled by the Adani family.
The Adani empire has denied all these allegations and threatened to take legal action to defend itself.
The malicious, unvetted report published by Hindenburg Research on 24 January 2023 has adversely affected the Adani Group, our shareholders and investors, said Jatin Jalundhula, Head of Legal, Adani Group, in a statement on 26 January.
“We are reviewing the relevant provisions under US and Indian laws regarding corrective and punitive action against the Hindenburg research,” he continued.
Adani has fallen in the ranks
But the Hindenburg, credited with bringing down Trevor Milton, founder of electric car maker Nicola, has doubled down.
“We welcome legal action regarding the company’s threats, to clarify,” the short seller responded. “We stand by our report and believe that any legal action against us will be futile.”
So far, investors seem to trust Hindenburg more than Adani Group’s betrayal.
The Adani empire lost a total of $51 billion in market capitalization in the last two trading sessions following the allegations. Adani Enterprises, the flagship of this empire, lost nearly a fifth (19%) of its value on January 27. Units like Adani Green Energy and Adani Total Gas are down 20%, day limit allowed. Adani Power lost 5 percent. Shares of Adani Ports fell 13.8% and Adani Transfer fell 19.47%.
As Adani’s wealth is mainly tied to its holdings in these various entities, its wealth has fallen by more than a fifth in three days. According to the Bloomberg Billionaires Index, he was worth $119 billion on January 24. But as of January 27, the richest Indian was only $92.7 billion. It lost $26.3 billion in three days, or 22 percent of its assets in 72 hours.
Adani has fallen in the rankings and has now found himself the world’s seventh richest man after entering his fourth year. If he cannot quickly convince investors that Hindenburg’s allegations are baseless, he risks finding himself outside the top 10 in the coming days.
The group promised a detailed response to the short seller’s lawsuit. But the release date has not been officially announced.
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