Fraud claims wipe $45bn off India’s Adani Group stocks28 January 2023
Shares in the business empire of Asia's richest man Gautam Adani nosedived Friday, extending this week's losses to
$45 billion, days after a US investment firm claimed it had committed "brazen" corporate fraud.
Adani, 60, began his week the world's third-richest person but has tumbled down the rankings to seventh on Forbes' billionaires tracker after a $22.6 billion hit to his fortune in Friday's trade.
His flagship Adani Enterprises plunged nearly 20 percent over the day's trade in Mumbai, briefly triggering an automatic trading halt, before recovering slightly to close 18.52 percent lower.
Trading was also halted in five other group companies, with shares in Adani Total Gas, Adani Green Energy and Adani Transmission falling 20 percent apiece and triggering their own stock exchange circuit breakers. "Obviously this is panic-selling," JM Financials equity research chief Ashish Chaturmohta told AFP, adding that traders were creating fresh short-sell positions to protect previously made bullish bets on Adani stocks. Hindenburg Research this week alleged in a report that Adani Group had used undisclosed related-party transactions and earnings manipulation to "maintain the appearance of financial health and solvency" of its listed business units. The conglomerate said it was the victim of a "maliciously mischievous" reputational attack by Hindenburg just as it was preparing for a major fundraising round.
Legal chief Jatin Jalundhwala said in a statement that Hindenburg's short position in the firm, announced in the report's release, was proof the company had a vested interest in driving down Adani stocks. Adani was exploring its punitive action against the research advisory in US and Indian courts, he said.
Hindenburg responded that Adani had ducked the issues its research had raised and instead resorted to "bluster and threats". "If Adani is serious, it should also file suit in the US," the firm said in a statement. "We have a long list of documents we would demand in a legal discovery process." Shares in Adani business units have soared as much as 2,000 percent in the past three years, adding more than $100 billion to its founder's net worth and vaulting him up the ranks of the world's richest people.