MUMBAI: The Adani Group on Wednesday slammed as “baseless” and “malicious” a damning report by a five-year-old US research firm that sent the stock price of group firms crashing, leading to a combined market cap loss of nearly Rs 97,000 crore ($12 bn).
The report by Hindenburg, which researches stocks, debt and crypto currencies, came on the eve of the flagship Adani Enterprises’ Rs 20,000-crore follow-on public offer (FPO).
Titled ‘Adani Group: How the world’s 3rd richest man is pulling the largest con in corporate history’, the report by Hindenburg Research, a firm that researches stocks, debt and cryptocurrencies, alleged that the group was involved “in a brazen stock manipulation and accounting fraud scheme over the course of decades”.
‘Hindenburg reports are motivated: Adani Group CFO after company loses $6 bn in a day
Hindenburg also said that it had taken a short position in stocks of Adani Group companies through offshore channels. It also said the group’s key listed companies have taken on substantial debt, including pledging shares of their inflated stock for loans, “putting the entire group on precarious financial footing”.
Adani Group quickly rejected the report and called it “a malicious combination of selective misinformation, stale and baseless allegations that have already been tested and rejected” by the Supreme Court. The conglomerate, with interests in edible oil, energy and infrastructure, said it wasn’t contacted before publishing the report.
“The timing of the report’s publication clearly betrays a brazen, mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming FPO for Adani Enterprises, the biggest FPO ever in India,” the statement from Adani Group CFO Jugeshinder Singh said.
It believes that its “informed and knowledgeable investors” would not be influenced by “one-sided, motivated and unsubstantiated reports with vested interests”.
“The group has always been in compliance with all laws, regardless of jurisdiction, and maintains the highest standards of corporate governance,” Singh said.
Despite the denial by the group, the damage to stock prices and market capitalisation of the group’s companies was substantial. All Adani Group stocks slid sharply in early trades but recovered some of those losses to close at levels which were higher than the intraday lows.
Adani Transmission lost 8.9%, Ambuja Cements 7.7%, ACC 7.3%, Adani Ports 6.3%, Adani Total Gas 5.6%, NDTV, Adani Power and Adani Wilmar all lost 5% each, Adani Green Energy lost 3% while Adani Enterprises closed 1.5% lower (see graphic).
As a result, the group’s combined market capitalisation was at a little over Rs 18.2 lakh crore, down from nearly Rs 19.2 lakh crore on Tuesday.
The FPO for Adani Enterprises is set to open on Friday and close on January 31. Late on Wednesday, it said that its Rs 6,000-crore anchor book was fully subscribed.