Tag: Hindenburg

The crisis marks a dramatic turn of fortune for Adani, who has in recent years forged partnerships with France’s TotalEnergies and attracted investors such as Abu Dhabi’s International Holding Company…reports Asian Lite News

Adani’s market losses swelled above $100bn on Thursday, sparking worries about a potential systemic impact a day after the Indian group’s flagship firm abandoned its $2.5bn stock offering.

The shock withdrawal of Adani Enterprises’s share sale marks a dramatic setback for founder Gautam Adani, the school dropout-turned-billionaire whose fortunes rose rapidly in recent years but have plunged in just a week after a critical research report by United States-based short-seller Hindenburg Research.

Aborting the share sale sent shockwaves across markets, politics and business. Adani stocks plunged, opposition politicians called for a wider probe and India’s central bank sprang into action to check on the exposure of banks to the group.

Meanwhile, Citigroup’s wealth unit stopped making margin loans to clients against Adani Group securities.

The crisis marks a dramatic turn of fortune for Adani, who has in recent years forged partnerships with foreign giants such as France’s TotalEnergies and attracted investors such as Abu Dhabi’s International Holding Company, as he pursues a global expansion stretching from ports to the power sector.

In a shock move late on Wednesday, Adani called off the share sale as a stocks rout sparked by Hindenburg’s criticisms intensified, despite it being fully subscribed a day earlier.

Adani Enterprises shares tumbled by 27 percent on Thursday, closing at their lowest level since March 2022.

Other group companies also lost further ground, with 10 percent losses at Adani Total Gas, Adani Green Energy and Adani Transmission, while Adani Ports and Special Economic Zone shed nearly 7 percent.

Since Hindenburg’s report on January 24, group companies have lost nearly half their combined market value. Adani Enterprises – described as an incubator of Adani’s businesses – has lost $26bn in market capitalisation.

As the #Adani crisis in the light of a Hindenburg Research report deepens, all stocks that are part of the Adani Group have reportedly taken a hit in the past week – wiping out billions from the embattled billionaire's net worth

Read more https://t.co/N3tNZn1DG6 pic.twitter.com/eJBwvUMVGf

— Hindustan Times (@htTweets) February 3, 2023

Adani is also no longer Asia’s richest person, having slid to 16th in the Forbes rankings of the world’s wealthiest people, with his net worth almost halved to $64.6bn in a week.

Adani’s plummeting stock and bond prices have raised concerns about a potential wider impact on India’s financial system.

India’s central bank has asked local banks for details of their exposure to the Adani Group, government and banking sources told Reuters on Thursday.

Market and investment group CLSA estimates Indian banks were exposed to about 40 percent of Adani Group’s $24.5bn debt in the fiscal year to March 2022.

Dollar bonds issued by Adani Group’s entities extended losses on Thursday, with notes of Adani Green Energy Ltd crashing to a record low. Adani Group entities made scheduled coupon payments on outstanding US dollar-denominated bonds on Thursday, Reuters reported, citing sources.

Hindenburg’s report alleged improper use of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of seven listed Adani companies.

The Adani Group has denied the accusations, saying the allegation of stock manipulation has “no basis” and stems from ignorance of Indian law. It said it has always made the necessary regulatory disclosures.

Congress questions Group’s ties with Chang Chung-ling

Attacking the government over the Hindenburg report on the Adani Group, the Congress on Thursday questioned the relation between Chinese businessman Chang Chung-ling and the Adani group.

Citing the report, Congress leader Pawan Khera at a press conference said, “As per Hindenburg Research, Chang Chung-ling runs (or used to run) a firm called Gudami International, which was identified as part of an investigation into government fraud in the Adani Group’s alleged circular trading of gems and that Chang Chung-ling and Vinod Adani’s Singapore residential address was the same”

“The most sensational revelation that has gone unnoticed by the Indian media so far, is that of the relationship between the Adani Group and Chang Chung-ling, a Chinese businessman of questionable antecedents,” he said.

The report says, “This is a significant matter, not only for the sake of the shareholders but also for the national security of India,” he added.

He said the Modi government has maintained a stoic silence on the Hindenburg Research report, as if nothing has happened.

“We want to tell PM Modi that we have nothing to say if you cheat your best friend, but shall not keep quiet if you cheat the investors of India – 29 crore policy holders of LIC and 45 crore account holders of SBI,” he added.

Kharge calls opposition meet

Leader of Opposition in the Rajya Sabha, Mallikarjun Kharge called for a meeting of opposition parties on Friday to chalk out a strategy over research group Hindenburg’s report on the Adani Group

Both Houses of Parliament were adjourned on Thursday as the opposition demanded an investigation by the Joint Parliamentary Committee (JPC) on the new revelations.

Kharge had said on Thursday: “We demand an investigation by the JPC on the issue and will raise the demand inside Parliament. We demand that a JPC should be constituted to go into the alleged irregularities.”

The opposition also alleged that the proceedings of both Houses of Parliament were adjourned to stop them from raising the Adani issue.

ALSO READ-Adani Group gives detailed responses to Hindenburg

Adani Group, in its 413-page report, has also responded to all 88 questions raised by Hindenburg…reports Asian Lite News

The Adani group, in a sharp and focused response to Hindenburg Research’s report on its businesses, has responded to all 88 questions raised by Hindenburg including the young age of its auditors.

The research firm, in its report, raised concerns about shares of Adani group companies having a possibility of declining from their current levels, owing to high valuations. Hindenburg criticised the groups’ substantial debt, including pledging share loans and called out its auditors, saying they were not capable of complex audit work.

To which the group replied that Adani’s Portfolio has highly effective internal and audit controls and each of the listed companies has a solid governance structure.

In a 413-page response to the Hindenburg Research report on the Adani business interests, the Adani Group has attacked Hindenburg as “an unethical short seller”.

According to the statement, the Adani portfolio and the Adani verticals are focused on bringing India into the global economy and nation-building.

In the summary of the long response by Adani Group, it said the report was “nothing but a lie”.

The Adani report states that by “holding short positions” in Adani stocks, which, simply put, is betting on the stock falling.

Hindenburg exposed its hand as it made huge money with the fall of Adani stocks immediately following the publication of the report on January 24.

“The document is a malicious combination of selective misinformation and concealed facts relating to baseless and discredited allegations to drive an ulterior motive,” the Adani Group’s response said.

Adani Group, in its 413-page report, has also responded to all 88 questions raised by Hindenburg.

It went on to say the report by the US-based firm was intended only to create a “false market in securities” to enable Hindenburg, an admitted short seller, to book massive financial gain through “wrongful means at the cost of countless investors”.

Earlier on Thursday, Adani Group said it was mulling legal options in the US and India against Hindenburg Research after its report accused firms owned by Gautam Adani of market manipulation and accounting fraud.

Jatin Jalundhwala, Group Head – Legal, Adani Group, in a statement, said, “The maliciously mischievous, unresearched report published by Hindenburg Research on 24 January 2023 has adversely affected the Adani Group, our shareholders and investors.”

“We (the Group) are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research,” Jalundhwala said.

“The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens,” the legal head said in a statement on Thursday.

Hindenburg, an US investment research firm published a report claiming that the Adani group had links with a labyrinth of off shore tax havens linked to Gautam Adani’s family and the firms exposure to high debt was a concern. The report also claimed that Adani group’s stock price was inflated and had significant downside risks.

On the report affecting Adani shares, Jatin Jalundhwala said, “Clearly, the report and its unsubstantiated contents were designed to have a deleterious effect on the share values of Adani Group companies as Hindenburg Research, by their own admission, is positioned to benefit from a slide in Adani shares.”

Jalundhwala also mentioned Hindenburg, which said that it had taken “short positions in Adani Group Companies through US-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities.”

The Adani group’s legal head said, “We are deeply disturbed by this intentional and reckless attempt by a foreign entity to mislead the investor community and the general public, undermine the goodwill and reputation of the Adani Group and its leaders, and sabotage the FPO (Follow-on Public Offering) from Adani Enterprises.”

The timing of the report by Hindenburg Research, Adani Group had said, “clearly betrays a brazen, mala fide intention to undermine” the Adani Group’s reputation with the “principal objective of damaging” the group’s Follow-on Public Offering from Adani Enterprises, the biggest FPO ever in India.

Earlier, on January 25, Jugeshinder Singh, the chief financial officer (CFO) of the Adani Group, on Wednesday said the conglomerate was ‘shocked’ about the Hindenburg Research’s report and termed it a “malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts”.

“We are shocked that Hindenburg Research published a report on January 24, 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,” the CFO said in a statement.

The timing of the report by Hindenburg Research, the CFO, in his statement, said “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, the biggest FPO ever in India.

He went on to state that the investor community has always reposed faith in the Adani Group on the basis of detailed analysis and reports prepared by financial experts and leading national and international credit rating agencies.  (ANI)

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