Hindenburg Research Adani Report
Gautam Adani, Founder and Chairman of the Adani Group, has amassed a net worth of roughly $120 billion, adding over $100 billion in the past 3 years largely through stock price appreciation in the group’s 7 key listed companies, which have spiked an average of 819% in that period. Adani Enterprises, Adani Transmission, Adani Power, and Adani Total Gas all report 72-plus percent of their shares held by insiders. Furthermore, Adani Wilmar, a new company with current insider ownership of 87.94 percent, must reduce its insider holdings to 75 percent.
Hindenburg Research Adani Report PDF said that for many Adani listed companies, a large portion of their “public” shareholders are funds based in the opaque jurisdiction of Mauritius. “Importantly, funds identified in this section, which we believe should be classified as “promoter” (insider) entities, hold enough shares of Adani listed companies to put four of them well over the 75% threshold, triggering delisting. Also Check Adani Response to Hindenburg Report PDF
Hindenburg Research Adani Report
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“Our research indicates that offshore shells and funds tied to the Adani Group comprise many of the largest “public” (i.e., non-promoter) holders of Adani stock, an issue that would subject the Adani companies to delisting, were Indian securities regulator SEBI’s rules enforced,” the report alleged. “Many of the supposed “public” funds exhibit flagrant irregularities such as being (1) Mauritius or offshore-based entities, often shells (2) with beneficial ownership concealed via nominee directors (3) and with little to no diversification, holding portfolios almost exclusively consisting of shares in Adani listed companies,” it added.
The report said that from a solvency perspective, multiple listed entities in the group are highly leveraged relative to industry averages: “Four of 7 of these entities have negative free cash flow, indicating that the situation is worsening. A company’s ‘current ratio’ is a measure of liquid assets less near-term liabilities. Five companies in the group (all but Adani Ports and Adani Wilmar) have current ratios below 1.0, suggesting a heightened short-term liquidity risk,” it said.
Hindenburg Research Report Says About Adani
- Hindenburg Research, a well-known short seller in the United States, disclosed short positions in the Adani Group on Wednesday, accusing the conglomerate of the improperly broad use of companies based in offshore tax havens and raising concerns about excessive debt levels.
- The firm published a research paper titled ‘Adani Group: How the World’s Third Richest Man Is Pulling the Biggest Scam in Corporate History‘ and revealed the findings of its two-year investigation presenting evidence that the Adani group, valued at Rs 17.8 trillion, it has engaged in a brazen scheme of stock manipulation and accounting fraud for decades.
- According to the report, Gautam Adani, the founder and chairman of the Adani Group, has a net worth of about $120 billion, which has increased by more than $100 billion in the past three years, mainly as a result of the growth in the price of actions in the group top seven publicly traded companies, which have risen by an average of 819 per cent during that time.
- Hindenburg says it identified 38 alleged Mauritius-based shell companies “controlled by” Vinod Adani, Gautam Adani’s older brother, along with several other similar companies based in Cyprus, the United Arab Emirates, Singapore and various Caribbean islands.
- The report alleges that the shell companies are used for “stock manipulation” and “money laundering”, using the private companies of the Adani Group on the books of publicly traded companies “to maintain the appearance of solvency and health financial”.
- The report also criticizes “investors, journalists, citizens, and even politicians,” saying they held back on “big blatant fraud [taking place] in broad daylight” for fear of retaliation. As of Wednesday morning Later, the Hindenburg report received little coverage in the Indian media outside of syndicated reports from business news agencies such as Reuters or Bloomberg.
- Hindenburg Research said the Adani Group companies are intricately and clearly linked and dependent on one another. None of the listed entities is isolated from the performance, or failure, of the other companies in the group. “We believe that it could take a single severe liquidity event in a single entity to trigger a negative cascade of events in other entities in the group that could affect the entire Adani Group.”
Hindenburg Report on Adani – How has the Adani Group responded to the allegations?
- If Adani is serious, it should also file suit in the US where we operate. We have a long list of documents we would demand in a legal discovery process,” it said, adding Adani has in its statements referred to its 106-page, 32,000-word report, with over 720 citations and prepared over the course of 2 years, as unresearched.
On Wednesday, Hindenburg stated that its two-year investigation revealed that Adani Group has “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades”. - Adani Group’s chief financial officer Jugeshinder Singh said in an official statement Wednesday that the company was shocked by the report, calling it a “malicious combination of selective misinformation and stale, baseless, and discredited allegations.” Adani Group did not address specific allegations in its official statement but said it has always complied with the law.
- The conglomerate also said that the timing of the report suggested malicious intent to “undermine the Adani Group’s reputation with the principal objective of damaging the upcoming follow-on Public Offering from Adani Enterprises,” referring to the group’s plans for increasing the amount of freely traded shares.
- On Thursday, Adani Group said in a new statement that it is considering legal action against Hindenburg. “We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research,” said Adani Group Legal Head Jatin Jalundhwala.
- He added that the report created “volatility in Indian stock markets” that was “of great concern and has led to unwanted anguish for Indian citizens.” The report was published days before bidding for a $2.5 billion stock sale for Adani’s secondary shares begins Friday, which will include anchor investors like the Abu Dhabi Investment Authority and Morgan Stanley.
You can download the Hindenburg Report on Adani PDF using the link given below.