Adani Hindenburg issue explained: The Adani Group in India canceled its $2.5 billion share sale on Wednesday due to the decline in the company’s stock prices. Hindenburg Research criticized the conglomerate in a report released on January 24th, which led to a drop of $86 billion in the group’s domestically listed stocks and a sell-off in its overseas bonds.
Who is Adani?
Adani is an Indian conglomerate that operates in several businesses including ports, logistics, agribusiness, energy, and defense. It was founded by Gautam Adani and is headquartered in Ahmedabad, India. The Adani Group has become one of the largest companies in India and has operations across several countries.
Who is Hindenburg?
Hindenburg Research is an American financial research and investigative firm that focuses on short-selling and uncovering fraudulent activities. The firm is known for publishing reports that criticize and uncover potential problems with publicly traded companies. Hindenburg Research has been involved in several high-profile investigations and has been cited in multiple media outlets.
What does Hindenburg say about the financial controls of Adani Group?
Hindenburg Research released a report accusing the Adani Group of improper use of tax havens and debt levels and questioning their financial controls. The report alleged that the group’s CFOs have changed frequently, raising concerns about financial management. Adani responded by stating that several of the CFOs mentioned by Hindenburg has since left the group and that their debt levels are in line with industry benchmarks. The company is currently considering an independent audit to reassure investors. Hindenburg Research made allegations of stock manipulation and accounting fraud against the Adani Group.
What was the response from Adani?
The group responded with a 413-page rebuttal, denying any wrongdoing. Gautam Adani later announced that his company, Adani Enterprises, would not be going ahead with its $2.5 billion follow-on public offering due to the current market volatility caused by Hindenburg’s allegations. The claims against the Adani Group have piled up, with allegations from other investors and media companies. Adani Group also issued a comprehensive riposte on Sunday, which refuted the report’s claims and denied any wrongdoing. Furthermore, the Adani Group released a statement affirming that the Hindenburg Research report was filled with unsubstantiated allegations and a misleading narrative and that the Adani Group remains committed to achieving the highest standards of corporate governance and ethical practices.
Also, check What is Ponzi Scheme?