Shares of companies that are part of India's Adani Group fell by as much as 20% after a short-seller report accused the conglomerate of corporate malpractices and accounting fraud.
The publication of the report by prominent short-seller Hindenburg Research on Tuesday caused a broader sell-off in Indian equity markets amid concerns about the solvency of some Adani companies.
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- The Adani conglomerate, founded in 1988 by magnate Gautam Adani, has subsidiaries in the commodities, ports, airports, mining, renewable energy, and cement industries.
- The Hindenburg report alleges that Adani Group relies on entities registered in tax havens like Mauritius and some Caribbean islands for money laundering and tax evasion.
- Hindenburg said it has short positions in Adani Group companies via U.S.-traded bonds and non-Indian-traded derivatives.
- A major sale of shares in Adani Enterprises failed on Friday, with investors bidding on ~1% of the available shares.
- Gautam Adani, worth $96.6B, is a close ally of Indian Prime Minister Narendra Modi.
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- Brokerage house CLSA estimates that Indian banks are exposed to less than 40% of Adani's debt, assuaging concerns that the Indian banking sector could be overly exposed to potential bankruptcies.
- Hindenburg Research is an investment research firm that specializes in short selling.
- The firm published a report in 2020 accusing electric truck maker Nikola Corp of fraud, which led to its founder, Trevor Milton, resigning from his role as executive chairman.
