Topline
Shares of Indian conglomerate Adani Group’s listed firms slumped Monday, after a report by U.S. short seller Hindenburg Group accused the head of India’s market regulator of a conflict of interest that allegedly prevented a proper investigation into Hindenburg’s earlier claims of fraud and stock manipulation by the billionaire-owned conglomerate.
Adani Group chairperson and founder Gautam Adani’s fortune slipped again on Monday after … [+]
Key Facts
Shares of the conglomerate’s flagship firm Adani Enterprises dropped more than 5% to $35.9 (Rs 3,013) after Indian stock markets opened on Monday, before recovering to $37.42 (Rs 3,145).
Adani Power’s shares dropped more than 10% to $7.37 (Rs 619), but soon recovered to $8.04 (Rs 675)—down 2.9% from Friday’s closing.
Shares of the group’s other key listed firms—Adani Energy, Adani Green, Adani Total Gas and Adani Ports—were also hit on Monday, falling between 1-4%.
In a report published Saturday, New York-based short seller Hindenburg Research alleged Madhabi Puri Buch, the chair of the Securities and Exchange Board of India (SEBI), and her husband, Dhaval Buch, invested in offshore funds linked to Adani in Bermuda and Mauritius.
Adani’s brother Vinod Adani allegedly used these funds to purchase and trade “large positions in shares of the Adani Group,” the report alleged.
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Forbes Valuation
According to our estimates, Gautam Adani’s net worth is $83.8 billion, down $1.5 billion due to Monday’s selloff. Despite this, he remains both India’s and Asia’s second richest person behind Mukesh Ambani.
News Peg
Buch and her husband made the investments in 2015—two years before she joined SEBI, the report said, citing “whistleblower documents.” The Adani Group has dismissed Hindenburg’s allegations calling them “malicious, mischievous and manipulative selections of publicly available information to arrive at pre-determined conclusions for personal profiteering with wanton disregard for facts and the law.”
Key Background
Hindenburg disclosed a short position against the Adani Group’s listed firms in January 2023 and published a report accusing the conglomerate of engaging in “brazen stock manipulation and accounting fraud scheme over the course of decades.” The report caused Adani’s fortune to tank sharply, dropping from a high of $126 billion in January 2023 to less than $50 billion later in the year. The company vehemently denied these allegations and its billionaire founder labeled them a “malicious” attack on his company and India’s economic growth. The controversy spiraled into a political issue in India due to Adani’s decades-long close relationship with Indian Prime Minister Narendra Modi. Earlier this year, the Supreme Court rejected a request for an independent probe into Hindenburg’s allegations and the short seller was hit with a show cause notice by SEBI for violating Indian securities laws.
Chief Critic
Buch responded to Hindenburg’s allegations in a statement on Sunday: “The investment in the fund referred to in the Hindenburg report was made in 2015” when the Buchs were “both private citizens living in Singapore and almost 2 years before Madhabi joined SEBI.” The two consulting companies set up by Buch when she was in Singapore “became immediately dormant on her appointment with SEBI” and were “explicitly part of her disclosures.” The Buchs criticized Hindenburg, claiming the short seller had been served a “show cause notice for a variety of violations in India” and in response “they have chosen to attack the credibility of the SEBI and attempt character assassination of the SEBI Chairperson.” In response, Hindenburg tweeted: “Buch’s response now publicly confirms her investment in an obscure Bermuda/Mauritius fund structure, alongside money allegedly siphoned by Vinod Adani. She also confirmed the fund was run by a childhood friend of her husband, who at the time was an Adani director.”
Crucial Quote
India’s opposition parties criticized the government and have called for Buch’s resignation. Rahul Gandhi, the leader of the opposition in Parliament, responded to Hindenburg’s report: “This is an explosive allegation because it alleges the umpire herself is compromised. The savings of millions of Indians…are at risk, it is therefore imperative that this matter is investigated… If investors lose their hard-earned money, who will be held accountable—PM Modi, the SEBI Chairperson, or Gautam Adani?”
Further Reading
Indian Billionaire Adani Attacks ‘Malicious’ Hindenburg Report—And Invokes Nationalism Again (Forbes)
Adani Group Shares Slide After Hindenburg Alleges ‘Largest Con In Corporate History’ (Forbes)
