Shares in listed companies linked to India’s sprawling Adani Group lost $7.7 billion in value after short-seller Hindenburg Research released a report targeting the conglomerate controlled by billionaire business magnate Gautam Adani.
Shares of seven listed Adani Group companies fell by an average of about 4 percent in late morning trade in Mumbai, while those of flagship Adani Enterprises fell as much as 3.7 percent. These falls brought the total loss in market value of Adani Group shares to about Rs625 billion ($7.7 billion).
Adani̵[ads1]7;s businesses are expanding rapidly. The self-made tycoon started out as a commodities trader in the 1980s before eventually building India’s largest private infrastructure group with around a dozen ports and eight airports. The group has several subsidiaries that span sectors including data and defence.
Hindenburg said it had taken a short position in Adani Group companies “through US-traded bonds and non-Indian-traded derivative instruments”. An Adani Group spokesperson did not immediately respond to a request for comment.
The report comes as Adani, whose net worth of about $118 billion ranks him as Asia’s richest person, according to Bloomberg, pushes ahead with a fundraising drive to fuel the rapid expansion of both his existing industrial and fossil fuel outfits, as well as green energy businesses.
The Hindenburg report, published on Wednesday morning ahead of the market opening in Mumbai, claims that “even if you ignore the findings of our survey . . .[Adani Group’s]central listed companies have 85 per cent downside purely fundamentally due to sky-high valuations”.
The billionaire businessman has claimed that the companies’ valuations are justified.
Last year, Adani announced plans to increase the amount of freely traded shares in Adani Enterprises after the company’s share price rose more than 3,300 percent in three years.
The shareholdings of several Mauritius-based investment funds that have for years held stakes in Adani Enterprises and other listed Adani Group companies have previously come under scrutiny by Indian regulators.
Analysts have raised concerns over the debt-fueled growth of Adani Group, noting that the conglomerate’s total debt of nearly Rs2tn (about $24bn) is equivalent to almost seven times forward adjusted earnings.
In December, the billionaire businessman told the Financial Times that some analysts “have not understood [his businesses] in real terms”.
“Who understands is my lenders, my banks, my global investors. Every time Adani enters the market, they love to invest. And that’s how we grow continuously,” he said.
Adani Group, which derives much of its revenue from mining and burning coal, has pledged to become one of the world’s biggest green energy players by investing $70 billion by 2030 in everything from green hydrogen to solar panel production.
Last year, Adani launched a hostile takeover of Indian broadcaster NDTV, with the tycoon seeking to build a media business.
Additional reporting by Benjamin Parkin, South Asia correspondent