Gautam Adani may not be a household name in the US, but the billionaire is the richest man in India and one of the richest in the world. However, Adani and his Adani Group are now embroiled in a nasty public fight with a US research group that accuses him of shady business practices, a controversy that has caused shares in his sprawling empire to plummet this week in India. Coverage:
- The report: A two-year investigation by Hindenburg Research, a short-selling firm in the US, alleges that Adani Group "has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades." The report refers to the "largest con in corporate history." Among the allegations is that Adani has used overseas shell companies linked to relatives to artificially goose share prices, per the Washington Post.
- The plunge: Five of the seven companies under the Adani Group's umbrella fell 16% to 20% on Friday, on top of even steeper drops earlier in the week, reports the Wall Street Journal. In all, the seven companies have lost $47 billion in market value since the report came out on Tuesday. Adani is described as an energy and infrastructure conglomerate.
- Threat to sue: Adani called the report an “intentional and reckless attempt by a foreign entity to mislead the investor community and the general public," and it threatened to sue, per CNBC.
- Please do: In response, Hindenburg Research said it welcomed any legal rejoinder by Adani, which it predicted would be "meritless." If "Adani is serious, it should also file suit in the U.S. where we operate," it added. "We have a long list of documents we would demand in a legal discovery process." Hindenburg has taken a short position on Adani, which means it profits as the conglomerate's shares fall.
- Third party: Influential American hedge fund manager Bill Ackman weighed in via Twitter, saying that he views the Hindenburg report as "highly credible and extremely well researched," per Reuters. Ackman stressed that he has no financial stake in the matter. His tweet backing the report is believed to have contributed to the wide Adani selloff, reports the Journal.
- About Adani: He and "his family have built a vast fortune mining coal to fuel energy-hungry India's fast-growing economy," per the AP. "Businesses in the conglomerate span industries including construction, data transmission, media, renewable energy, defense manufacturing and agriculture." At times in recent years, Adani has been ranked No. 1 among the world's billionaires, but he has dropped from No. 2 to No. 4 over the last week, with Bloomberg listing his worth at $113 billion. Adani has strong ties to Indian Prime Minister Narendra Modi.
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