Adani’s fortune, who 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 billionaires’ fortunes in real time. The seven publicly traded Adani companies, 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 on misrepresentations at Nikola, said in an investigation published after a two-year investigation that Adani had pulled the “biggest scam in the company’s history.”
Adani Group, the billionaire’s umbrella holding company, called Hindenburg’s accusations “baseless and discredited”, and suggested the report was malicious in scope and timed to a subordinate share sale of one of its companies.
Here’s what you need to know about the allegations surrounding India’s energy lord, 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 plastic merchant who traveled by scooter.
His big break came after India began to liberalize its economy in the early 1990s and he was commissioned to develop a deep-water port at Mundra, which is now the country’s largest commercial port. From there, his business quickly expanded into infrastructure, logistics and energy, with coal-related businesses fueling his rise.
James Crabtree, an India specialist who wrote a book about the country’s billionaires, called Adani “humble” in a 2018 Australian Financial Review article.
“Both at home and abroad, he also displayed a gleeful approach to debt… in a process that positioned him as perhaps the most financially aggressive of India’s latest generation of billionaires,” wrote Crabtree, also noting that the tycoon operated from a humble office. in his home state. (Adani is also a close ally of Indian Prime Minister Narendra Modi, who previously headed Gujarat.)
Adani’s net worth has grown rapidly, from $9 billion in 2020 to $127 billion in December, amid a broader boom in India’s capital markets. Forbes on Friday said he was worth just under $97 billion.
How big is the Adani Empire?
Very, very big. Adani’s companies operate major Indian seaports, produce cement and sell cooking oil. He also recently acquired New Delhi Television, a leading English-language news channel that was one of the last networks to be seen as journalism independent.
But coal remains at the heart of his empire and, according to Global Energy Monitor, he is the world’s largest private developer of coal-fired power plants and mines. More than 60 percent of his holding company’s income came from coal-related activities, The Washington Post reported in December.
His empire now extends to sectors such as defense, renewable energy, transmission and infrastructure.
What are Adani’s connections with Narendra Modi?
Adani’s staggering 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 was a promising middle-ranking official from the Bharatiya Janata Party.
In the decades since, Adani has juggled political leaders from across India, but the two seemed to fit together, associates of both men previously told The Post. The politician oversaw an infrastructure boom when he ran Gujarat and came to respect Adani as a skilled operator, a former Modi adviser said.
How political will often favors a coal billionaire and his dirty fossil fuel
After Modi was first elected prime minister in 2014, he flew from Gujarat to New Delhi in a private jet. A smiling Modi waved from the stairs, 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 “for free” by Modi.)
The Post reported in December that the Indian government has revised laws on at least three occasions to help its coal companies, saving it at least $1 billion. Critics such as Adani Watch, an Australian-based non-profit organization, said that Hindenburg’s allegations, if they prove true, “are just one example of what happens when crony capitalism and regime cronyism create a perceived culture of impunity. “
An Adani spokesman declined to comment on the billionaire’s political ties when presented with a list of questions ahead of The Post’s December report. An Adani associate, 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 the developing ports to transport coal when India faced shortages and building coal-fired power stations when the country needed electricity.
What are Hindenburg’s allegations of fraud?
Hindenburg published a report accusing the Adani Group of, among other things, artificially inflating the stock prices of its companies over decades by using a network of foreign shell companies associated with Adani’s relatives. Hindenburg argued that Adani’s companies were collectively overvalued by more than 80 percent in the Indian stock market.
The billionaire investor Bill Ackman in a tweet Thursday called Hindenburg’s report “highly credible” and “extremely well researched.”
Indian markets stopped trading some of Adani’s subsidiaries on Friday after a major sell-off.
Adani said it would seek legal action against Hindenburg, who said it was the challenge.
The selloff has cast doubt on the fate of an Adani company’s $2.45 billion secondary share sale, which kicked off Friday. A market analyst said he was keeping an eye on whether the company would withdraw its offer or lower its asking price.
The sharp fall in share prices means that “markets have taken the contents of the report seriously,” said Hemindra Hazari, an independent research analyst.
The allegations cast doubt on the integrity of India’s capital markets, said Andy Mukherjee, an Indian economics commentator writing for Bloomberg Opinion.
This puts the Indian regulator in a difficult position as to what to do next: try to restore investor confidence by thoroughly investigating allegations of market manipulation, or dismiss them as the handiwork of foreigners envious of India’s rise? ” he said in an email.
The case has also raised questions about the amounts of money lent by the Government of India to Adani. Public sector banks hold about 30 percent of Adani Group’s debt, according to Hong Kong brokerage CLSA. The company said exposure was manageable even as the debt of 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.