A small investment firm picks a fight with India’s richest tycoon
Save time by listening to our audio articles as you multitaskThe latest Adani news was less euphoric. On January 24th Hindenburg Research, an American short-seller, which makes money when its targets’ share prices tank, released a report titled, “Adani Group: How the World’s Third-Richest Man is Pulling the Largest Con in Corporate history”. It alleges that share prices of Adani companies have been artificially inflated.
Hindenburg made its name by sniffing out problems in sexy startups. They included Nikola, an electric-lorry firm whose founder was later convicted of fraud, and Lordstown Motors, a carmaker that had overstated orders. In going after Adani, Hindenburg has picked a fight with a corporate Goliath with a record of fast growth and of infrastructure investments that are pharaonic in their ambition.
And lofty valuations aren’t the end of the story, the short-seller claims. It describes a complex edifice: seven Indian-listed companies sitting atop 578 subsidiaries. In 2022, it alleges, these engaged in 6,025 related-party transactions. This is the visible bit of an even more complex system, with multiple companies, many in foreign jurisdictions, which Hindenburg argues “have no obvious signs of operations”.
Despite this forceful denial, investors were nervy. The combined market value of listed Adani firms fell by $11bn, or 5%. Some investors have harboured worries about the group’s structure, acquisitiveness and debt. The fact that the fall wasn’t steeper attests to its uncanny ability to weather storms.
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