Short-seller attack wipes $100bn off the value of India’s Adani Group

One of the world’s richest tycoons has seen more than $100 billion of the value of his business empire disappear in just over a week.

Indian business magnate Gautam Adani, the college dropout turned billionaire, became the richest person in Asia through the success of his Adani Group.

But the conglomerate, which trades commodities, ports and energy, was rocked last week by a damning report from short-seller Hindenburg Research.

After a two-year investigation, New York-based Hindenburg accused it of “pulling the biggest scam in the company’s history” — claims that sent shares of the entire Adani Group into freefall.

The ten listed companies controlled by the conglomerate plummeted nearly 50 percent on the Mumbai stock exchange.

That has wiped a total of $108bn – or £88bn – off the conglomerate’s value since the Jan. 24 attack.

Adani, who became the second richest man in the world last year with a fortune of £120 billion, has seen his own personal wealth fall by nearly £50 billion.

The 60-year-old married father of two broke his silence yesterday, emphasizing: “Our balance sheet is healthy and our assets are robust.” But he faces an uphill battle to turn the situation around.

In his devastating report, Hindenburg accused the Adani Group of stock price manipulation and accounting fraud.

The report highlighted alleged misuse of offshore tax havens, as well as alarm bells about high debt and the valuations of the listed companies.

The group has criticized the report as “a malicious combination of selective disinformation and outdated, baseless and discredited allegations.”

It denounced the research firm for launching a “calculated attack on India” and said the report’s conclusions stemmed from an ignorance of Indian law.

However, the 413-page rebuttal did not appease investors, and the Adani Group dropped a £2bn fundraising effort yesterday to prop up the conglomerate.

It marked a humbling turnaround after receiving strong investor support for the share sale.

The group said the £2 billion raised from India’s largest-ever secondary equity offering would be returned to investors.

Mr Adani said: ‘Given these extraordinary circumstances, the company’s board of directors felt that continuing with the matter would not be morally correct. For me, the best interests of my investors come first and everything else comes second.

“That is why we have withdrawn the sale in order to protect the investors against possible losses.”

He said the setback “will not affect our existing operations and future plans in any way.”

Regulators are now weighing in on the chaos as the Securities and Exchange Board of India investigates the share price drop.

India’s central bank has asked local lenders about their ties to the conglomerate, estimating that banks were exposed to around 40 percent of the group’s £20bn debt.

Both Adani and Hindenburg are holding their ground, meaning “the battle lines are now drawn,” said Russ Mould, director of investment at AJ Bell.

“Whoever loses will be hurt and right now the stock price collapse and the multi-billion dollar fall in stock valuations means that it is Adani and his controlling family who are in trouble right now,” the analyst said.

Jo Johnson is leaving the bank because of Adani

Duo: Boris Johnson and his younger brother Jo

Boris Johnson’s brother has quit as a director of an investment bank because of his connections with Adani Group.

According to the Companies House documents, Jo Johnson has resigned from Elara Capital, an India-focused London-based firm.

The value of Adani companies plummeted after short-seller Hindenburg Research accused it of stock price manipulation and accounting fraud. Elara was a bookrunner on an abandoned stock offering from Adani Enterprises.

Johnson said he had “assurances from Elara that it complies with its legal obligations and is in good standing with regulatory authorities.”

He said he quit after recognizing that his role required “greater domain expertise in specialized areas” than he anticipated.