Adani was born on June 24, 1962, in Ahmedabad, India. He started his entrepreneurial journey by starting a commodity trading business in 1981, which eventually led to the formation of the Adani Group. Over the years, the group has expanded into various industries and has become a major player in the Indian economy. Adani is also known for his philanthropic activities and is the founder of the Adani Foundation, which focuses on education, healthcare, and rural development initiatives in India.
Gautam Adani was the fourth-richest person in the world less than two weeks ago. The self-made Indian industrialist was wealthier than either Bill Gates or Warren Buffett, with a personal fortune estimated to be over $120 billion.
Then, an American short seller named Hindenburg Research, who had stakes against Adani’s enterprises, accused him of perpetrating “the greatest scam in corporate history.”
As investors withdrew their backing, Adani’s companies have lost $110 billion in value since that time, and his wealth has decreased by half, to just over $61 billion.
Investor doubts over the report’s assertions persist, and the repercussions are spreading despite the Adani Group’s description of the report as “baseless” and “malicious.” Following a protest from opposition MPs, Adani’s business associates and lenders are confirming their affiliations with the conglomerate, and the Indian federal government is reportedly looking into his operation.
What you should know is as follows.
Gautam Adani, who is he?
Tycoon Gautam Adani, 60, started the Adani Group more than 30 years ago.
He was a college dropout who created a vast economic empire that included mining, logistics, energy generation, and infrastructure. Because of his success, he has been compared to John D. Rockefeller and Cornelius Vanderbilt, two men who built substantial monopolies in America during the Gilded Age in the 1800s.
He was the richest man in Asia, and in September he briefly overtook Jeff Bezos to take second place in the world’s wealth rankings. He is also regarded as Narendra Modi, the prime minister of India,’s, close buddy.
What has been leveled against him?
When Hindenburg Research released a study in late January accusing Adani and his firms of extensive fraud and “brazen stock manipulation” that it said occurred over decades, investors were taken aback. The company disclosed that it has acquired a short position in the Adani Group companies, which would allow it to profit from a decline in its value.
Hindenburg presented Adani with 88 inquiries that raised issues about the viability of his conglomerate’s finances. They included inquiries into the group’s offshore businesses and the reason for its “such a complicated, interconnected corporate structure.”
In reaction to the allegations, The Adani Group has stated it is considering taking legal action. It accused Hindenburg of waging “a deliberate attack against India” and asserted that the investment company just has its financial interests in mind. Analysts claim that Adani Group has not adequately addressed the issues mentioned by the research.
What do financiers believe?
Investors are fleeing as a result of the allegations because they don’t want to get caught on the wrong side of a trade. Since Hindenburg’s analysis was released on January 24, shares of Adani Enterprises, the company that serves as Adani’s corporate parent, have fallen by about 55%.
As a result, the business is currently having trouble finding new capital. Just 24 hours after it was signed, Adani Enterprises abruptly canceled a $2.5 billion share sale transaction on Wednesday.
On Friday, the majority of Adani Group companies’ stocks fell once further. Five listed Adani companies had their trading halted by India’s stock exchanges after their shares fell by the daily restrictions of 5% and 10%.
A significant business partner, TotalEnergies, reported that Adani has consented to allow one of the “big four” accounting firms to conduct a “general audit.” Adani didn’t offer a confirmation.
Through joint ventures in India, the French energy giant said its $3.1 billion exposure to Adani was “minimal.” Additionally, it stated that these collaborations were “undertaken in full conformity with existing laws, specifically Indian legislation.”
What follows is what?
Concerns are being raised about how Adani’s enterprises will continue to make money in the wake of the selling surge.
One of Hindenburg’s concerns, the enormous debt load of Adani enterprises, is being scrutinized. The turbulence was probably going to make it harder for the organization to raise money, according to rating agency Moody’s on Friday.
Adani emphasized in a statement released Wednesday night that his company is still in good shape and that executives would review its capital market strategy “after the market stabilizes.”
He declared, “We have a very healthy balance sheet with solid cashflows and secure assets, and we have a perfect track record of servicing our loans.”
The sell effects off’s might not be limited to Adani. If the price of the assets held by the Adani Group keeps falling, Indian banks that hold those assets would also be impacted.
Based on its most recent assessment, the Reserve Bank of India stated on Friday that the banking industry “remains resilient and stable” and promised to keep an eye on the situation.
The Securities and Exchange Board of India (SEBI) stated Saturday that it has seen “unusual price movement in the stocks of a corporate conglomerate” in its initial statement regarding the recent market turbulence. It was said that “necessary action” would be taken if such information came to SEBI’s attention and was evaluated.
A commitment to protecting market integrity was stated by the market regulator.
India Inc. is defending itself
Meanwhile, the incident is the cause of rising political unrest in New Delhi.
Indian opposition MPs have called for an investigation into the Hindenburg report. On Wednesday, they protested inside the nation’s parliament as the finance minister delivered the budget for the year.
Due to the ruckus caused by their demands that normal business is suspended on Friday to allow an urgent discussion of the Adani problem, both houses of parliament were adjourned until Monday.
The primary opposition Congress party tweeted, “Action is being taken against Adani all across the world, yet PM Modi is quiet.” When will our government act?
The future of India Inc. is in doubt due to concerns about the state of Adani’s empire, which was just a few weeks ago actively promoting prospects for international investors at the World Economic Forum in Davos, Switzerland.
The messengers of the nation leaned on the country’s generally positive economic outlook. India will experience the largest economic growth of any major nation this year, according to a World Bank prediction made last month.
Manish Chowdhury, head of research at brokerage Stoxbox, declared that the Adani controversy had “opened a huge can of worms.” Foreign investors now perceive “the India story as weak,” he continued.