Gautam Adani, founder of the eponymous company, lost half of his fortune in one week. INDRANIL MUKHERJEE / AFP
FOCUS- A specialized American investment fund has published a vitriolic report on the financial situation of the largest company on the subcontinent. The markets were quick to react.
“How the world’s third richest man pulls off the biggest scam in corporate history.The intentionally alarmist assertion tops a report by the world-renowned investment fund Hindenburg Research. This immensely rich man is the Indian Gautam Adani, founder and director of the eponymous company, which reigns over several key sectors of the Indian economy: ports, airports, energy, defence, media…Wherever you look in this country, Gautam Adani is present“, summarizes the wall street journal.
The survey was conducted by financial analysts very listened to on the markets. Hindenburg Research was founded by Nathan Anderson, who is not his first feat of arms. It was he who revealed the frauds of the hydrogen truck manufacturer Nikola, whose boss had shamelessly lied to his investors. This time, it was the Indian group Adani who went down in flames by Nathan Anderson and his teams. After investigating the group for two years, they provide proof that public data on its solvency have been manipulated by the leaders. A serious practice among many others, we understand from reading the report.
tremors of the empire
The stock markets, which are hardly forgiving, reacted immediately. Within days, the Adani Group’s combined market capitalization shrunk by $120 billion – more than half of its stock in mid-January. Faced with the vast movements of funds, the quotations of certain subsidiaries had to be suspended on Friday. The fortune of the now former third richest man in the world, Gautam Adani, is swept away in the fall: it is now estimated at 69 billion dollars, against double it a little ten days ago.
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Beyond his personal case, ranks of investors who firmly believed in the infallibility of the Indian giant and its subsidiaries, accuse heavy losses. Among them: TotalEnergies, partner of the Indian conglomerate for several years. The Frenchman is a shareholder in four subsidiaries, two of which are listed: 50% in Adani Total Private, 37.4% in Adani Total Gas, 19.75% in Adani Green Energy and 50% in AGEL23. Despite everything, TotalEnergies considers its exposure “limited“, figures in support. “It represents 2.4% of the Company’s capital employed and only $180 million in net operating income in 2022“, declares the French company in a press release.
Gautam Adani did not remain a spectator of the waverings of his empire. As of Sunday, January 29, the company responds to analysts from Hindenburg Research – nicknamed on this occasion the “madoff from manhattanin reference to the notorious Wall Street crook – releasing his own 413-page report to refute the charges. “This is not just an unwarranted attack on any specific company, but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of indiaAdani Group pleaded.
Capitalization collapse
The diatribe did not convince the markets, where the titles of the various subsidiaries of the conglomerate continued to unscrew throughout the week. Gautam Adani therefore appeared in person on Indian television on Friday. He denied on this occasion the accusations of collusion between the Indian power, held since 2014 by Narendra Modi, and himself. “The fact is that my professional success is not due to a single leader but to the political and institutional reforms initiated by several leaders and governments over a long period of more than three decades.“, hammered the tycoon in response to what he describes as”baseless allegations“.
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While Adani Group planned to raise the equivalent of $ 122 million on the financial markets, the company would have backpedaled on Saturday, according to Bloomberg. Earlier in the week, the collapse of its capitalization had already led the Indian conglomerate to give up selling for 2.5 billion dollars of shares. Questioned by Bloomberg, Moody’s Investors Service estimates that the financing capacities of the most important company of the subcontinent are durably reduced. At least for the next two years.
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