- The short-seller that helped expose fraud at Nikola Motors is now focusing on a agency owned by the fourth richest particular person in the world.
- Hindenburg Research issued a short-report on the India-based Adani Group on Wednesday.
- Hindenburg alleged that Gautam Adani is “pulling the largest con in corporate history.”
Hindenburg Research rose to prominence when it uncovered fraud at Nikola Motors in 2020, which finally led to the downfall of its founder, Trevor Milton, and a more than 90% decline in Nikola’s stock price.
Now, the short-selling outfit has turned its consideration to Gautam Adani, the world’s fourth-richest particular person and founder and chairman of Adani Group, an India-based conglomerate that owns every part from cement companies to media firms.
After a two-year investigation, Hindenburg alleged in a report on Wednesday that the Adani Group operates an online of shell firms that interact in market manipulation and accounting fraud.
Those practices are what helped catapult Adani from a rather-unknown businessman exterior of India to the world’s fourth richest particular person in simply three years, in keeping with Hindenburg.
According to the Bloomberg Billionaires Index, Adani is price $118.9 billion, simply behind Jeff Bezos wealth of $119.6 billion as of Wednesday morning. At the beginning of 2020, Adani had a web price of simply $10 billion, in keeping with Bloomberg.
The Adani Group is the most important port operator in India, and is also India’s largest coal dealer and thermal coal producer. Adani himself at the moment owns 75% of Adani Enterprises, Adani Power, and Adani Transmissions. He also owns about 37% of Adani Total Gas, 66% of Adani Ports and Special Economic Zone, and 66% of Adani Green Energy.
All of those publicly traded firms have seen their stock costs soar over the past few years, driving the majority of Adani’s large wealth achieve.
But Hindenburg thinks the valuations of Adani-linked firms are inflated, even for those who disregard its allegations of economic malpractice.
“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,” Hindenburg said.
Hindenburg at the moment holds a brief position against the Adani group and is poised to revenue if its market valuation declines. Following the release of Hindenburg’s report early Wednesday morning, Adani Group firms lost a mixed $12 billion in market value.
A response from Adani Group’s CFO Jugeshinder Singh denied the allegations, saying in a press release that the report is “a malicious combination of selective misinformation and stale, baseless and discredited allegations.” Singh said Hindenburg made no try to contact them to confirm allegations in the report.
Singh also said the timing of Hindenburg’s report was designed to inflict injury on its deliberate follow-on public providing of shares from Adani Enterprises.
But in keeping with Hindenburg, there are many purple flags that buyers ought to be aware of. Those embody the Adani Group using a tiny audit agency that has no present web site and has audited only one different publicly listed agency, and the truth that the conglomerate has beforehand been the topic of 4 fraud investigations by the Indian government.
“We believe the Adani Group has been able to operate a large, flagrant fraud in broad daylight in large part because investors, journalists, citizens and even politicians have been afraid to speak out for fear of reprisal,” Hindenburg said.