Companies owned by Asia's richest man lost more than US$ 50 billion in market value after the publication of a report describing a series of illegal activities by his group. Experts believe the Indian government has made many concessions to the conglomerate in recent years, including direct investment by India's largest insurance company.
New Delhi (AsiaNews) – The Adani Group – which is owned by Asia's richest man, Gautam Adani – has presented a detailed rebuttal to allegations of wrongdoing made recently by Hindenburg Research, a US investment research and trading firm. Due to government investment in the conglomerate, the savings of many Indians are at risk.
Following the Hindenburg report, the Adani group lost US$ 50 billion in market value. In its defence, the latter claims that Hindenburg’s fraud allegations – based, among other things, on offshore tax havens – is a “calculated attack on India” and that it has complied with all relevant laws.
In response, the US research firm said that while “India is a vibrant democracy and an emerging superpower with an exciting future,” they “also believe India's future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation."
Adani, 60, is very close to Indian Prime Minister Narendra Modi. According to analysts, since the late 1980s he has built an economic empire thanks, in part, to his links to the Indian government in key sectors, such as infrastructure – in particular ports and energy – considered central to India’s ambitions for economic growth and self-sufficiency.
Adani’s fortune has gone from “just” US$ 8.9 billion in 2020 to US$ 143 billion in 2022 while now, after the Hindenburg report, it has dropped to US$ 84.4 billion.
There is more. Adani has benefited from direct government investment, the consequences of which are likely to fall on the Indian middle class.
The Life Insurance Corporation (LIC), India's largest state-owned insurance company, has poured millions of rupees into the conglomerate in recent years, and today holds shares in Adani Enterprises, Adani Ports, Adani Total Gas, Adani Transmissions and Adani Green, with shares of 4.23 per cent, 9.14 per cent, 5.96 per cent, 3.65 per cent and 1.28 per cent respectively.
These five companies lost at least 165 billion rupees, or US$ 2 billion, in two trading sessions after Hindenburg Research report came out.
This is not the first time that the LIC has come in for criticism over bad investments and poor returns, but this is the first time that the company has had to deal with huge losses by a private company.
As a result, markets quickly took Hindenburg Research’s accusations seriously.
For his part, Adani has accused the US firm of spreading false information to profit from short selling, a purely speculative tool that consists of betting against the share price of a company in the expectation that it will fall.
Indeed, Hindenburg's reports have had some success in the past, highlighting illegal practices employed by certain companies while profiting from their bankruptcy.