Indian tycoon Gautam Adani's net worth slipped to $58 billion on Saturday as his group's listed firms continued to be hit by a selloff following a US short-seller report.
The report triggered a rout in stocks of Adani Group's seven listed companies, which collectively lost more than $110 billion in market valuation before paring losses in recent days.
Released on January 24 by Hindenberg Research, the report accused his Adani Group of pocketing over $100 billion in merely three years through brazen stock manipulation and accounting fraud schemes over the course of decades.
However, the conglomerate denied the allegations and claimed that the report was intended to enable the US-based short-seller to book gains, without citing evidence.
Adani was the third richest person globally when the report was published. But he now stands 22nd on Forbes Magazine's List of Billionaires. Over the period, he also lost his crown as Asia's richest man to fellow Indian Mukesh Ambani.
Here are some crucial points of the story
The report
Hindenburg called its findings "the largest con in corporate history".
Its founder and chairman, Nathan Anderson, in the 100-page report accused Adani of using a web of companies in tax havens such as Mauritius and the Bahamas to inflate revenue and stock prices.
The report also said family members were installed in top positions and that the Group falsified balance sheets to cover up debts, pumping up Adani shares by a staggering 85% in recent years.
What is Hindenburg?
Hindenburg Research is a less than 5-year-old small trading and financial research firm based on Wall Street in New York. The research firm's name, Hindenburg, derives from the German airship that exploded in New Jersey in 1937, killing 36 passengers.
On its website, Hindenburg says it looks for accounting irregularities, mismanagement and undisclosed related-party transactions. The firm invests its own capital to shorten the stocks of companies it finds indulging in any wrongdoing.
About Adani and his ‘empire'
He is the founder and chairman of the Adani Group, one of the largest business conglomerates in India. A native of Gujarat — the same state where India's Prime Minister Narendra Modi is from — Adani, 60, is a college dropout. He founded the group in walked away from his father's textile shop to set up a commodities trading business in 1988.
The group has interests in ports, airports, gas distribution, green energy, data centres, agri-logistics, edible oil, and power, among others. It reported revenues of $23bn in the most recent financial year, ending in March 2022.
The group is India's biggest airport operator and also controls the country's largest private port. The Adani Group also owns a controversial coal mine in Australia.
Critics say Adani's closeness to Modi has helped him win business and avoid proper oversight.
Response to the report
"All transactions entered into by us with entities who qualify as 'related parties' under Indian laws and accounting standards have been duly disclosed by us," Adani said in the 413-page response issued late on January 29.
"This is rife with conflict of interest and intended only to create a false market in securities to enable Hindenburg, an admitted short seller, to book massive financial gain through wrongful means at the cost of countless investors," it added.
The research report, the group said, made "misleading claims around offshore entities" without any evidence whatsoever.
Before that, the group on January 26 said it was considering taking action against Hindenburg, which responded on the same day by saying it would welcome such a move.
'Strong' Fundamentals
Adani himself insisted in a recent video statement that the "fundamentals of our company are very strong, our balance sheet is healthy and assets robust.
"Once the market stabilizes, we will review our capital market strategy," he said, stressing that its record on paying back debt was "impeccable".
Investigation
India's market regulator is investigating Adani Group's links to some of the investors in the conglomerate's aborted $2.5 billion share sale, sources said on Friday.
It is probing relationships between Adani and at least two Mauritius-based firms, Great International Tusker Fund and Ayushmat Ltd, which participated as anchor investors, among others.
Under India's capital and disclosure requirement rules, any entity related to a company's founder or the founder group is not eligible to apply for the anchor investor category. The focus of the probe would be whether any of the anchor investors are “connected” to the founder group.
Shares for Adani flagship firm lenders
Three Adani Group companies have pledged shares for lenders to Adani Enterprises.
On Friday, India's top court, hearing two petitions related to large investor losses, said that investor interests need to be protected.
On the same day, ratings agency Moody's downgraded the ratings outlook for some of the group's entities in the latest in a series of blows for the group.
Modi furious
Modi said on February 8 that Indians will not swallow "lies and abuse" against him, as opposition critics accuse his government of giving undue favours to the Adani Group.
The government and the business group both deny over-close ties.
Opposition parties see the Adani scam as an opportunity to corner Modi, who is eyeing a third term in elections next year.