U.S. short seller Hindenburg Research has accused Indian conglomerate Adani Group of “brazen stock manipulation and accounting fraud” in a scathing report that pressured shares of affiliated companies.
Adani Group is chaired by billionaire tycoon Gautam Adani, who is currently the world’s third richest man and is worth almost $119 billion, according to Bloomberg.
Shares in Adani’s flagship company, Mumbai-listed Adani Enterprises
which is the country’s biggest port operator, fell 2%, though steeper drops were seen for other companies held by the company, with Adani Power
losing 5% and Adani Green Energy
Hindenburg, an activist short seller that famously alleged that Nikola
demonstrated a truck by rolling it downhill, disclosed it had taken a short position in Adani Group through U.S.-traded bonds and non-Indian-traded derivative instruments.
Adani Group did not respond to MarketWatch’s request for comment. Its CFO, Jugeshinder Singh, said in a statement to Reuters the report was a “malicious combination of selective misinformation and stale, baseless and discredited allegations.” The short-seller report was timed to disrupt a public offering from Adani Enterprises, Singh added.
The Hindenburg report alleges a wide network of offshore shell entities, controlled by the Adani family, which were used to escape a 75% limit on control. Hindenburg also alleges the offshore shell companies send money to onshore private companies when then send them onto the publicly traded companies.
Hindenburg says the accusations have been subject to multiple government investigations in the past.
“Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations,” the short seller added.
The report comes at a critical time for Adani as he makes moves to branch out into international markets and strengthen his grip on his existing fossil fuel and industrial businesses. The group has also entered the cement business and expanded its green energy efforts with a pledge to invest $70 billion in clean energy by 2030.
Adani is also trying to boost his media profile. Last year, it launched a takeover of Indian broadcaster NDTV.