What you should know about Gautam Adani and the stock rout after the Hindenberg report


The Indian billionaire Gautam Adani, who last year for a short time set out to become the world’s second richest person, has had a tough week. On Tuesday, he was accused of fraud and market manipulation by US-based short sellers at Hindenburg Research, which caused the companies he controls to shed tens of billions in value.

The fortune of Adani, which until recently had a net worth greater than that of Bill Gates and Warren Buffett, fell by more than $22 billion on Friday, according to Forbes, which tracks billionaire fortunes in real time. The seven listed Adani companies, which are involved in everything including energy and infrastructure, lost more than $50 billion in market value this week, Bloomberg News reported.

Hindenburg, best known for a 2020 report into misrepresentations by electric car company Nikola, said in research published after a two-year investigation that Adani had pulled the “biggest hoax in corporate history”.

Adani Group, the billionaire’s umbrella holding company, called Hindenburg’s accusations “baseless and discredited” and suggested that the report was malicious in intent and timed to sabotage one secondary sale of shares in one of the company’s companies.

Here’s what you should know about the allegations surrounding the Indian energy baron who is Asia’s richest person.

Adani, 60, had humble beginnings. Born to a textile merchant in the western state of Gujarat, Adani spent his early career as a small-time plastics trader traveling by scooter.

His big break came after India began to liberalize its economy in the early 1990s, and he was tasked with developing a deep-water port at Mundra, which now hosts the largest commercial port in the country. From there, his company quickly expanded into infrastructure, logistics and energy, with coal-related ventures fueling his progress.

James Crabtree, an India specialist who wrote a book on the country’s billionaires, called Adani “modest” in a 2018 Australian Financial Review article.

“Both at home and abroad, he also displayed a debonair approach to debt … in a process that positioned him as perhaps the most financially aggressive of India’s newest generation of billionaires,” wrote Crabtree, who also noted that the tycoon worked from an unassuming office in his home state. (Adani is also a close ally of Indian Prime Minister Narendra Modi, who previously led Gujarat.)

Adani’s net worth has grown rapidly, from $9 billion in 2020 to $127 billion in December, amid a broader boom in Indian capital markets. Forbes said Friday that he was worth just under $97 billion.

How big is the Adani empire?

Very, very big. Adani’s companies operate major Indian ports, manufacture cement and sell cooking oil. He also recently bought New Delhi Television, a leading English-language news channel that was one of the last networks to be seen as journalistically independent.

But coal remains at the heart of his empire, and he is the largest private developer of coal-fired power plants and mines in the world, according to the Global Energy Monitor. More than 60 percent of his holding company’s revenue came from coal-related operations, The Washington Post reported in December.

His empire now extends to sectors such as defence, renewable energy, transmission and infrastructure.

What are Adani’s connections with Narendra Modi?

Adani’s dizzying rise closely parallels Modi’s political career. The two men first met in the 1990s in their home state of Gujarat, when Adani was an up-and-coming businessman and Modi a promising mid-level official in the Bharatiya Janata Party.

In the decades since, Adani has juggled ties with political leaders from across India, but the two appeared to be getting along, associates of both men previously told The Post. The politician oversaw an infrastructure boom when he led Gujarat and came to respect Adani as a capable operator, a former Modi adviser said.

How political will often favors a coal billionaire and his dirty fossil fuels

After Modi was first elected prime minister in 2014, he flew to New Delhi from Gujarat in a private plane. A smiling Modi waved from the steps, with Adani’s purple logo looming on the back of the plane. (Adani said in a 2016 interview with the Economic Times newspaper that the plane was not used by Modi for free.)

The Post reported in December that on at least three occasions the Indian government revised laws to help his coal businesses, saving him at least $1 billion. Critics such as Adani Watch, an Australian-based nonprofit, said the Hindenburg allegations, if proven true, “are just another example of what happens when crony capitalism and regime favoritism create a perceived culture of impunity.”

A spokesperson for Adani declined to address the billionaire’s political affiliations when given a list of questions ahead of The Post’s December report. An Adani employee, who spoke on condition of anonymity because he was not authorized to comment publicly, told The Post that the billionaire’s success was due to his ability to support Delhi’s economic priorities, such as developing ports to transport coal when India faced shortages and building coal plants when the country needed electricity.

What are the fraud charges made by Hindenburg?

Hindenburg published a report accusing the Adani Group of, among other things, boosting the share prices of its firms over decades by using a network of foreign shell companies linked to Adani’s family members. Hindenburg claimed that Adani’s companies were collectively overvalued in India’s stock market by more than 80 percent.

Billionaire investor Bill Ackman in a chirping Thursday called Hindenburg’s report “highly credible” and “extremely well researched.”

Indian markets halted trading in some Adani subsidiaries on Friday after a major sell-off.

Adani said it would look to initiate legal action against Hindenburg, which it said it would welcome challenge.

The sale has thrown into doubt the fate of an Adani company’s $2.45 billion secondary share sale, which opened on Friday. A market analyst said he was watching to see if the firm would withdraw its offer or lower its asking price.

The sharp drop in share prices means “markets have taken the content of the report seriously,” said Hemindra Hazari, an independent research analyst.

The allegations cast doubt on the integrity of Indian capital markets, said Andy Mukherjee, an Indian economics commentator who writes for Bloomberg Opinion.

“This puts the Indian regulator in a difficult position as to what to do next: Seek to restore investor confidence by thoroughly investigating allegations of market manipulation, or dismiss them as the handiwork of foreigners jealous of India’s progress?” he said in an email.

The case has also raised questions about the amounts that Public Bank of India has lent to Adani. Public banks hold around 30 percent of Adani Group’s debt, according to brokerage CLSA in Hong Kong. The firm said the exposure was manageable even as debt held by the group’s five largest companies doubled over the past four years to $25.7 billion as of March.

Gerry Shih and Anant Gupta in New Delhi contributed to this report.

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