Adani fortunes rally riding on gulf money
By Venkatesh Raghavan
Mumbai: Rallying against the adverse publicity, there was some respite to the Group as Adani Enterprises Rs 20,000 crore follow-on public offer (FPO) was fully subscribed on the final day of the subscription today as institutions pumped in funds. The quota reserved for non-institutional and institutional investors was subscribed fully. Following this, many group stocks too rallied. Adani Enterprises stock went up by Rs 83 as of 2.55 pm today.
Abu Dhabi-based conglomerate International Holding Company (IHC) announced yesterday of investing AED (United Arab Emirates dirham) 1.4 billion (USD 400 million) into the Adani Enterprises’ FPO.
Earlier, having failed to overcome the negative sentiments that burgeoned from US-based Hindenburg Research report on alleged manipulations and over-pricing of stocks, shares of Adani Group companies fell drastically in a three-day selloff that erased more than $68 billion of the market value of the Group. The Group Chairman Gautam Adani fell out of the coveted list of the world’s top ten richest persons.
Ever since the Hindenburg report, the Adanis had failed to pacify investor sentiments. The Adani Group companies cumulatively registered a USD 65 billion dip in their total share value in the closing hours of Monday, January 30, 2023. The same day at an all-party meeting ahead of the budget session, the Opposition parties told the government that it planned to raise questions about the Adani controversy in Parliament.
Hindenburg Research, a US-based short seller firm, had flagged massive irregularities in the stocks of Adani Group, alleging that shares of many of their group companies were over-priced by nearly 80 per cent. Following this report released by Hindenburg in the previous week, a steep fall in the share prices of Adani commenced and remains unabated as yet.
A host of claims and counterclaims are in place, with the former accusing the latter of “systematic loot” designed to hold back India, ever since the US short-seller Hindenburg Research came out with a very damaging report causing a steep dip in the Adani Group’s share prices. Hindenburg’s response came soon after the Adani Group charged that the report was designed to attack the financial stability of Indian markets.
The spate of exchanges followed suit soon after Adani Group came out with a 413-page response to the queries as also the “88 questions” that were raised by Hindenburg Research on late Sunday evening (January 29, 2023).
The Adani Group stated: “We are shocked and deeply disturbed to read the report published by the “Madoffs of Manhattan” – Hindenburg Research on 24 January 2023 which is nothing but a lie. The document is a malicious combination of selective misinformation and concealed facts relating to baseless and discredited allegations to drive an ulterior motive. This is rife with conflict of interest and intended only to create a false market in securities to enable Hindenburg, an admitted short seller, to book massive financial gain through wrongful means at the cost of countless investors.”
The Adani Group expressed its concerns that the statements of an entity “sitting thousands of miles away, with no credibility or ethics” caused serious and unprecedented adverse impact on the investors. It claimed that the “mala fide intention underlying the report was apparent given its timing when Adani Enterprises Limited is undertaking what would be the largest ever further public offering of equity shares in India”. The Group even went to the extent of calling it a “calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India”.
Referring to the response, Hindenburg spokesperson stated, “The Adanis have failed to respond to the specific key allegations that have been made against the group. Additionally, they are attempting to hide their fraudulent conduct under the cloak of nationalism.”
The allegations summarized that over the decades, the Adani Group has resorted to rampant stock manipulation and fraudulent entries in their table of accounts. Adani Group had earlier stated that Hindenburg was indulging in an attempt to bring about a “calculated attack” on India, also dubbed the US firm as the ‘Madoffs of Manhattan’ (an obvious reference to American fraudster and financier Bernard Lawrence Madoff who was instrumental in massive embezzlements by the usage of what is construed as the world’s largest Ponzi scheme).
Hindenburg took a dig at the Adanis by calling their claim sensational in nature and that it reflected on their own track records. Hindenburg however, took care of sugarcoating their attack by referring to India as an emerging superpower with an exciting future, before accusing the Adanis of holding the country back owing to massive fraudulent transactions. The US firm further stated, for the most part, the 413-page response dealt with irrelevant matters and hardly responded to the barrage of 80 specific questions, leaving 62 of them unanswered.
The Hindenburg response also dwelt on the Group chairman Gautam Adani’s accusing their firm of a serious breach of laws pertaining to securities and foreign exchange. The firm categorically denied any such violation or breach and also pointed out that Adani has failed to identify any such law in his long-worded response. The firm further claimed that the Adanis had attempted to divert public attention from the core issues that had been raised and indulged in a pitched narrative throwing up nationalistic fervour.
From the Adani stables, the allegation was that Hindenburg had plotted to make massive financial gains by forcing the stock prices to nosedive. A huge number of unsuspecting investors will suffer massive losses owing to Hindenburg’s humongous misinformation attempt, their statement inferred. Terming the Hindenburg findings as baseless and malicious, they further alleged that it was an act performed with an ulterior motive. However, the Hindenburg report has alarmed investors. The Life Insurance Corporation (LIC), which is a large investor in Adani stocks, wants to talk to Adani management. News agency Reuters quoted LIC Managing Director Raj Kumar saying they had the “right to ask relevant questions and we will definitely engage with them [Adanis]”.
*With inputs from Amit Sinha