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Shares of companies run by Asia’s wealthiest billionaire slump after short-seller report

MarketWatch logo MarketWatch 1/25/2023 Anviksha Patel
© sam panthaky/Agence France-Presse/Getty Images

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 fell into fourth place in Bloomberg’s billionaire rankings.

Read: Who is Gautam Adani? The world’s fourth richest man.

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 in other companies held by the group, with Adani Power losing 5% and Adani Green Energy falling 3%.

Hindenburg, an activist short seller that famously alleged that Nikola had 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’s CFO, Jugeshinder Singh, said in an official statement that the Hindenburg 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 the improprieties were carried out via a wide network of offshore shell entities, controlled by the Adani family.

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 to 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 the Indian broadcaster NDTV.

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