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.

 

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.  More: 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. Zoom Out: 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.