Adani vs Hindenburg battle continues-Gautam Adani compared the allegations made by Hindenburg Research to a “calculated attack” on India, & its economic success.
The Indian tycoon Gautam Adani, who is the target of a short-seller from New York, has outdone him 4:1: His group published a 413-page reply on Sunday night in India. The company has now referred to the 106-page research that Hindenburg Research used to make its accusations of stock-price manipulation and accounting fraud as “nothing short of a deliberate securities fraud under applicable legislation.” Is the response, which is supported by the statement that the organisation may seek redress, as substantial as it is lengthy? Maybe it doesn’t matter all that much.
Adani Group said in a 413-page response that the research was motivated by “an ulterior objective” to “create a false market” so that the US company could profit financially.
This is a calculated attack on India, the independence, integrity, and quality of Indian institutions, as well as the country’s growth story and aspirations, the statement read. “This is not merely an unwarranted attack on any specific enterprise.”
The document is “a malicious combination of selective misinformation and withheld facts linked to unsubstantiated and discredited allegations to drive an ulterior motive,” it claimed, asserting that the claims made in Hindenburg Research’s January 24 study are “nothing but a lie.”
The statement read, “This is fraught with conflict of interest and intended exclusively to establish a phoney market in securities to allow Hindenburg, an admitted short seller, to earn significant financial gain through improper tactics at the expense of other investors.”
It continued to cast doubt on Hindenburg’s moral character and integrity, claiming that the timing of the study, which coincided with one of Adani Enterprises Limited’s largest-ever equity share offerings in India, made the report’s hidden agendas clear.
According to the statement, “Hindenburg has not issued this report for any altruistic purposes, but solely out of selfish intentions and in flagrant violation of existing securities and foreign currency rules.” “The study is not ‘independent’ nor ‘objective’ nor ‘fully researched,'” .
This is due to the fact that what seems like a rounding mistake for one of the richest businessmen in the world will determine the future of Adani’s massive industrial empire: Large anchor investors have already received roughly Rs 6,000 crore of shares in the ongoing Rs 20,000 crore ($2.5 billion) public offering by the group’s flagship at the high end of the per-share price range of Rs 3,112 to Rs 3,276. The Adani Enterprises Ltd. stock, however, fell by about 20% over two trading days last week as a result of the Hindenburg report and finished at barely more than Rs 2,761 on Friday. (The shares increased by as much as 10% in the early Monday trade in Mumbai.)
In other words, the company is requesting that investors pay more for something that is already on the market. The given quotas may still be filled by institutions and high-net-worth individuals; after all, the failure of the share sale might undermine investor confidence in India and result in significant collateral damage to the rest of their portfolio. Only the retail sector needs to be persuaded; it needs to contribute less than $1 billion, or Rs. 7,000 crore.
It’s unlikely that any small investors will be able to decide after carefully reading Adani’s responses to the 88 questions put out by the short-seller. not before Tuesday, when the public offer expires in India.
They have to ignore the discounted pricing and take a risk. They’ll presume that the media, experts, and professional investors are considering the facts. There is simply too much information to comprehend quickly, especially with Hindenburg releasing another note in which it claims Adani has not specifically responded to 62 of its 88 queries. People will be compelled to evaluate the issue in light of their earlier political ideas as a result. According to Hindenburg, nationalism cannot mask fraud. N But nationalism has the power to change how people perceive things. And right now, that’s what counts.
The distressed Indian billionaire will have breathing room to pull out the shorts if subscriptions come in and the share sale is successful. The majority of market players I met with in India over the weekend think that finance pledges will finally materialise. At last check, Adani’s net worth was estimated to be $93 billion. How can Adani, the most powerful businessman in the nation, fail to raise more than a billion dollars, wondered one seasoned investor in Indian markets over the phone? I am only allowed to hold one of those positions, not both.
It’s still a challenging issue. Adani has dismissed rumours that it is considering lengthening the public offering or reducing the issue price. The effects of those strategies might extend beyond the stock market. A significant investor in India’s ports, airports, roads, data centres, grain storage silos, and solar farms is a businessman from Gujarat, the home state of Prime Minister Narendra Modi.
If political opponents attack Modi, the New Delhi government, which is hoping to give infrastructure one last boost in Wednesday’s annual budget, will have to reevaluate its economic approach in advance of next year’s general elections. A public outcry over the involvement of the nation’s state-owned banks and life insurers in the debt and equity of a heavily indebted billionaire may occur if the share offer fails (or even wobbles).
It’s understandable that Hindenburg made its analysis public last week, given the significant stakes involved in a single share sale. The size of the short positions and their originators are unknown. Only the fact that they are dealing in “U.S.-traded bonds and non-Indian-traded derivatives, together with other non-Indian-traded reference securities,” according to Hindenburg’s report, is disclosed. That is also a sensible move. Any wager on a stock price falling in India must be executed by borrowing shares; so-called “naked short sales” are not allowed.
The management of a company can select and eliminate bearish bets. It can also be extremely expensive to hold onto a position using local derivatives for any period of time.
If, for example, a sizable family office with global reach agrees to support Hindenburg’s report outside of India, things may become a lot simpler. It might use a dollar-denominated total-return swap obtained from a mid-sized multinational bank’s trading desk to go short. (Large financial institutions might not want to risk their India franchises for customised agreements like this that might upset the Indian regulator.)
Whatever the strategy behind the short sales, it appears to be working thus far: Over two trading days, the company’s stock market value dropped by $50 billion. On Monday morning, the decline in its dollar bonds from the previous week increased. Clearly, the Adani Group’s response hasn’t fully persuaded bond dealers. Or possibly the domestic share sale, the domino Adani can’t let fall, is also being evaluated by the fixed-income market. Information overload is a genuine weapon in what is turning out to be an epic struggle for public opinion.
Hindenburg Research hits back at Adani Group as Adani vs Hindenburg battle continues
Adani Group’s claim that its study was an attack on India has been denied by US short seller Hindenburg Research, which claims that a “fraud” cannot be obscured by nationalism or a bloated response that misses answers to crucial concerns.
Hindenburg commented on the 413-page statement Adani Group produced late on Sunday night in response to its research, saying it thought India was a thriving democracy and a developing superpower with a promising future and that Adani Group was holding it back by “systematic plunder.”
The two-year investigation conducted by Hindenburg revealed that Adani Group had “engaged in a blatant stock manipulation and accounting fraud scheme over the course of decades,” according to the report released last week.
The group led by Asia’s richest man, Gautam Adani, “started with the sensationalistic allegation that we are the ‘Madoffs of Manhattan,'” according to Hindenburg, in its response. We have allegedly broken “relevant securities and foreign exchange regulations flagrantly,” according to Adani. The statement read, “This is another severe charge that we completely dispute, despite Adani’s failure to name any such laws.”
Adani vs Hindenburg battle continues The Adani Group “predictably tried to move the focus away from fundamental issues and instead created a nationalist narrative,” said Hindenburg in response. Adani Group has made an effort to equate the prosperity of India with its own stratospheric growth and Gautam Adani’s wealth, the statement claimed.
Adani vs Hindenburg battle continues “We are at odds.” To be clear, we think India is a thriving democracy and a superpower on the rise with a promising future. “We also think that the Adani Group, which has swathed itself in the Indian flag while ruthlessly plundering the country, is holding back India’s future.” A “fraud is a fraud even when it is committed by one of the wealthiest people in the world,” the statement read, adding that Adani’s “413-page” answer only contained roughly 30 pages focused on issues relevant to the report.
Adani vs Hindenburg battle continues The remaining portion of the response, according to the statement, “consisted of 330 pages of court documents, 53 pages of high-level financial information, general data, and details on irrelevant corporate initiatives, such as how it promotes female entrepreneurship and the production of safe vegetables.”
“In our study, we questioned the Adani Group on 88 specific issues. Adani did not precisely address 62 of them in its response. Instead, it largely gave generic deflections and groupings of problems.” It continued by restating its accusations and the fact that the Adani Group had not addressed them.
In just two trading sessions last week, the tiny New York business that specialises in short selling’s report caused the Adani Group to lose more than USD 50 billion in market value, and Adani himself lost more than USD 20 billion, or almost one-fifth of his total wealth.
Adani vs Hindenburg battle continues In the report, Hindenburg criticised the conglomerate’s “substantial debt,” which includes pledging shares for loans, Vinod Adani’s “management of a vast labyrinth of offshore shell entities,” which move billions into group companies without having to disclose them, and the auditor, who “hardly seems capable of complex audit work.”
Adani Group stocks witness high volatility amidst a war of words between the company and Hindenburg Research-
Adani vs Hindenburg battle continues On Monday, trading in all nine of the Adani Group’s stocks was highly volatile as the verbal spat between the company and New York-based short seller Hindenburg Research continued. Since the report’s release on January 24, the market value of the nine Adani Group firms as a whole has decreased by $5.57 lakh crore. Five of the nine Adani Group firms’ shares closed in the negative on Monday.
On Monday, shares of Adani Enterprises increased by 4.76%. At 2,893, the company’s stock price is still 7% below the lower end of the 3,112 range that it has set for its follow-on public offer (FPO). On Friday, the first day of the FPO, only 1% of the shares had been subscribed.
The worst-hit equities were Adani Total Gas, Adani Transmission, and Adani Green Energy, which had a 20% decline in share price. Adani Power and food business Adani Wilmar saw a 5% decline in share price.
Source: NSE, current market price as of January 30, 2023, at 3:30 p.m.
The group’s total market capitalization has decreased by 5.57 lakh crore since January 24, with a decline of 3.22 lakh crore on Friday alone.
FAQs-
1. Is Adani at a loss?
The market capitalization of Adani fell by more than Rs. 1.53 lakh crore on Monday. The performance comes after the group supported by Gautam Adani published a more than 400-page response to Hindenburg’s accusations, and the US-based company also retaliated.
2. What is the Hindenburg Report?
Adani research report from Hindenburg: The Adani Group, according to a study published by Hindenburg on January 25, was “involved in a brazen stock manipulation and accounting fraud operation over the course of decades,” the report claimed. Hindenburg sparked a raging wildfire that could burn Asia’s richest man to death.
