The Indian conglomerate Adani Group, led by Asia’s richest man, has stepped up its defense against fraud claims made by an American investor. Global investors should take note of the Hindenburg research regarding India and other emerging markets.
The Adani Group declared that it is considering suing US investor Hindenburg Research. The richest man in India is allegedly involved in “brazen” accounting fraud and market manipulation. With a net worth of $113.4 billion, Gautam Adani is even wealthier than Bill Gates or Warren Buffett. With analysis that causes stocks to decline, Nathan Anderson, the company’s short seller, has become well-known in recent years.
The Adani Group declared it is considering legal action once more. A short seller’s accusations of corporate wrongdoing were answered by Gautam Adani in a 413-page document. In the midst of a $2.5 billion share sale, he was attempting to calm the investors. Hindenburg claimed that the response disregarded its main accusations.
According to applicable law, Research’s findings were “nothing short of a calculated securities fraud,” the company claimed. It reiterated its threat to file a lawsuit, claiming that some of its most important allegations were ignored by Hindenburg’s response.
As the verbal battle between the company and New York-based short seller Hindenburg Research continued, trading on Monday saw high volatility for all nine of the Adani Group’s stocks. Since January 24, when the report was released, the market value of the nine Adani Group companies as a whole has decreased by $5.57 lakh crore. Five out of the nine companies that make up the Adani Group had negative share price closings on Monday.
Monday saw a 4.76% increase in the share price of Adani Enterprises. The company’s stock price is currently 7% below the lower end of the 3,112 range that it has set for its follow-on public offer (FPO), at $2,893. Only 1% of the FPO’s subscribers remained as of Friday night, the first day of the FPO.
India stocks make up over 14% of the MSCI emerging-market equity index, second only to China. The number of companies eager to sell shares has exploded, expanding the size of the country’s stock market. By the end of the decade, the third-largest equity market in the world, according to Morgan Stanley, will be located in India.
The Research released a report accusing the Group of “a brazen stock manipulation and accounting fraud scheme.” The business gained notoriety by placing bets against emerging cryptocurrency businesses and unsuccessful electric vehicle manufacturers. On that day, the benchmark Indian stock index fell 1.6 percent, the most since more than a month. In observance of the country’s annual Republic Day, all markets in India were closed.
Indian investors from around the world have been looking for security in their rapidly expanding neighbor with a younger population and more promising future. They were alarmed, however, by a prominent report on the Group and Asia’s richest man. India and emerging markets more generally have become a Pandora’s Box thanks to New York-based Research.
The stock prices of Indian banks and the Life Insurance Corporation of India fell on Friday. The private Indian banks are only responsible for a small portion of Adani’s bank borrowing, and the majority of its debt is in the form of bonds. The extent of corruption and feather-bedding is not lost on the Indian public, as Mihir Sharma points out. But doing so depends on maintaining even a thin veneer of stability and financial probity. These issues were marginalized by COVID. The CLSA brokerage notes that private Indian banks are only responsible for a small portion of Adani’s bank borrowing and that a large portion of the company’s debt is in the form of bonds.
The Group has made an effort to equate India’s success with its own, by conflating its quick ascent and the wealth of its chairman, Gautam Adani. It is systematically looting the country while draping itself in the Indian flag. To be clear, we think India is a thriving democracy and a superpower on the rise with a promising future. We also think that fraud is fraud, even if it is committed by one of the richest people on earth.
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