Shares of listed companies linked to India’s sprawling Adani Group shed $7.7 billion after short seller Hindenburg Research released a report targeting the conglomerate controlled by billionaire business tycoon Gautam Adani.
Shares of seven listed companies in the Adani Group fell by around 4% on average in late morning Mumbai, with those of flagship Adani Enterprises falling as much as 3.7%. These falls brought the combined loss in market capitalization for Adani Group shares to around 625 billion rupees ($7.7 billion).
Adani’s businesses are growing rapidly. The self-made tycoon started as a commodities trader in the 1980s before eventually building India’s largest private infrastructure group with a dozen ports and eight airports. The group has several subsidiaries covering sectors such as data and defence.
Hindenburg said it took a short position in Adani Group companies “through US-traded bonds and non-India-traded derivatives.” A spokesperson for Adani Group did not immediately respond to a request for comment.
The report comes as Adani, whose net worth of around $118 billion ranks him as Asia’s richest person, according to Bloomberg, continues a fundraising campaign to fuel his rapid equipment expansion. existing industrial and fossil fuels as well as green energy companies. .
Hindenburg’s report, released Wednesday morning before the market opened in Mumbai, claims that “even if you ignore the findings of our investigation. . .[Adani Group’s]major listed companies are down 85% on a purely fundamental basis due to exorbitant valuations”.
The billionaire businessman argued that his companies’ valuations were justified.
Last year, Adani announced plans to increase the number of freely traded shares in Adani Enterprises after the company’s share price gained more than 3,300% in three years.
The holdings of several Mauritius-based investment funds that have held stakes in Adani Enterprises and other Adani Group listed companies for years have come under scrutiny from Indian regulators in the past.
Analysts have raised concerns about Adani Group’s debt-fueled growth, noting that the conglomerate’s total debts of almost Rs2tn (about $24 billion) equate to nearly seven times pre-adjusted earnings.
In December, the billionaire businessman told the Financial Times that some analysts “didn’t understand [his businesses] in real terms”.
“Who understands, these are my lenders, my banks, my global investors. Every time Adani comes into the market, they like to invest. And that’s how we continually grow,” he said.
The Adani Group, which derives much of its revenue from coal mining and combustion, has pledged to become one of the world’s largest green energy players by investing $70 billion in by 2030 in everything from green hydrogen to solar panel manufacturing.
Last year, Adani launched a hostile takeover of Indian broadcaster NDTV, with the mogul trying to set up a media company.
Additional reporting by Benjamin Parkin, South Asia correspondent