India’s Adani scraps $2.5B share sale after fraud claims

Feb 2, 2023, 1:09 AM | Updated: 3:13 pm

NEW DELHI (AP) — Indian conglomerate Adani Enterprises called off its $2.5 billion share offering after it lost tens of billions of dollars in market value due to fraud claims by a U.S.-based short-selling firm.

Billionaire Gautam Adani ‘s company said Thursday it will review its plans for raising capital after it canceled the share sale late Wednesday, citing “market volatility.”

Adani stocks sank after Hindenburg Research, which has a track record of sending stock prices of its targets tumbling, accused the group of “brazen” stock market manipulation and accounting fraud, among other financial abuses.

The share offering had drawn nearly 51 million bids, exceeding the 45.5 million offered to the public. It was seen as a crucial test of investor confidence in Adani, whose net worth had shot up about 2,000% in recent years as share prices for his listed companies soared.

Adani made a vast fortune mining coal as energy-hungry India grew swiftly after its economy was liberalized in the 1990s. Adani companies operate airports in major cities, build roads, generate electricity, manufacture defense equipment, develop agricultural drones, sell cooking oil and run a media outlet.

By the time trading closed Thursday, Adani Enterprises was down by another 27% in a single day, following Wednesday’s 30% drop. Stocks in six of Adani’s other listed companies sank between 5% and 10%.

Overall, shares in Adani Enterprises have tumbled 54.5% since the Hindenburg report was published last week.

In a video address Thursday, Adani said the decision to scrap the share offering was made “to insulate the investors from potential losses.”

“For me, the interest of my investors is paramount and everything else is secondary,” he said.

Adani Enterprises said in a statement that it would withdraw the transaction and return the money to its investors. The decision would not “have any impact on our existing operations and future plans,” it said, adding that the group’s balance sheet was “very healthy” with strong cashflows and secure assets.

Hindenburg said it was betting against the group, accusing it of “pulling the largest con in corporate history.” It said it judged the seven key Adani listed companies to have an “85% downside, purely on a fundamental basis owing to sky-high valuations.”

Most of the allegations involved concerns about the group’s debt levels, activities of top executives, use of offshore shell companies to artificially boost share prices and past investigations into fraud. It listed 88 questions for the group to answer.

Adani Group dismissed Hindenburg’s allegations, and called its report a “calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India.” On Sunday, it issued a 413-page report that rejected its questions, saying none were “based on independent or journalistic fact finding.”

Adani’s response included documents and data tables. It said the group has made all necessary regulatory disclosures and abided by local laws.

India’s parliament was adjourned Thursday for the first half of the day when the chair of the upper house rejected a request by opposition lawmakers to debate the allegations made by Hindenburg.

India’s federal government and its finance ministry have not commented on the Adani stock rout so far.

Mallikarjun Kharge, president of the main opposition Congress party, told reporters opposition parties were demanding a discussion of public sector investments “in companies losing market value, endangering the hard-earned savings” of millions of Indians. The opposition parties were pushing for an investigation into the Adani Group by a parliamentary or a Supreme Court-appointed panel.

The stock losses on Wednesday cost Adani his title as the richest man in Asia and in India. He slid from being the world’s third richest man to the 13th as his fortune plummeted to $72 billion, according to Bloomberg’s Billionaire Index. Prior to the Hindenburg report, his net worth was about $120 billion.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

This photo provided by Robert Wilkes, owner of a house boat management company, shows smoke rising ...

Associated Press

Houseboats catch fire while docked at Wahweap Marina on Lake Powell

More than half a dozen house boats momentarily caught fire at a popular boating destination on the Utah-Arizona line on Friday.

1 day ago

File - Women work in a restaurant kitchen in Chicago, Thursday, March 23, 2023. On Friday, the U.S....

Associated Press

US hiring, unemployment jump in May and what that says about the economy

The nation’s employers stepped up their hiring in May, adding a robust 339,000 jobs, well above expectations.

1 day ago

(Pixabay Photo)...

Associated Press

Oath Keeper from Arizona sentenced for role in Jan. 6 riot at US Capitol

Edward Vallejo, a U.S. Army veteran from Phoenix, oversaw a “Quick Reaction Force” at a Virginia hotel that was prepared to deploy an arsenal of weapons into Washington if needed, authorities say.

2 days ago

FILE - U.S. Border Patrol Chief Raul Ortiz listens during a news conference, Jan. 5, 2023, in Washi...

Associated Press

US Border Patrol chief is retiring after seeing through end of Title 42 immigration restrictions

The head of the U.S. Border Patrol announced Tuesday that he was retiring, after seeing through a major policy shift that seeks to clamp down on illegal crossings at the U.S.-Mexico border following the end of Title 42 pandemic restrictions.

3 days ago

FILE - President Joe Biden talks with House Speaker Kevin McCarthy of Calif., on the House steps as...

Associated Press

House OKs debt ceiling bill to avoid default, sends Biden-McCarthy deal to Senate

The House approved a debt ceiling and budget cuts package late Wednesday, as President Joe Biden and Speaker Kevin McCarthy assembled a bipartisan coalition of centrist Democrats and Republicans against fierce conservative blowback and progressive dissent.

3 days ago

Sean Bickings (Family Photo via city of Tempe)...

Associated Press

Family of man who drowned last year in Tempe Town Lake files wrongful death lawsuit

The family of a man who drowned in Tempe Town Lake a year ago filed a wrongful death lawsuit against the city Wednesday, noting that its police department doesn't have a policy requiring officers to go into the water to save someone.

3 days ago

Sponsored Articles

...

OCD & Anxiety Treatment Center

How to identify the symptoms of 3 common anxiety disorders

Living with an anxiety disorder can be debilitating and cause significant stress for those who suffer from the condition.

(Desert Institute for Spine Care in Arizona Photo)...

Desert Institute for Spine Care in Arizona

5 common causes for chronic neck pain

Neck pain can debilitate one’s daily routine, yet 80% of people experience it in their lives and 20%-50% deal with it annually.

...

Day & Night Air Conditioning, Heating and Plumbing

Company looking for oldest air conditioner and wants to reward homeowner with new one

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.

India’s Adani scraps $2.5B share sale after fraud claims