Indian tycoon Gautam Adani lost his title of Asia’s richest person on Wednesday as a rout in his conglomerate’s biggest companies deepened to $84 billion in the wake of a short-seller report.
A report by Hindenburg Research last week alleged improper use by the group of offshore tax havens and stock manipulation, as well as concerns about high debt and the valuations of seven listed Adani companies.
It has heightened scrutiny of the conglomerate with an Australian regulator saying on Wednesday that it would be reviewing the allegations to see if further enquiries are warranted.
The Adani Group has denied Hindenburg’s allegations, saying the short-seller’s narrative of stock manipulation has “no basis” and stems from an ignorance of Indian law. It has always made necessary regulatory disclosures, it added.
Wednesday’s stock losses saw Gautam Adani slip to 10th on Forbes rich list with an estimated net worth of $84.1 billion, just below rival Mukesh Ambani, the chairman of Reliance Industries Ltd (RELI.NS) who has an estimated $84.4 billion. Before the Hindenburg report, Adani had ranked 3rd.
The worsening rout comes despite the group managing to muster support from investors to haul a share sale for flagship firm Adani Enterprises over the line on Tuesday.
“There was a slight bounce yesterday after the share sale went through, after seeming improbable at a point, but now the weak market sentiment has become visible again after the bombshell Hindenburg report,” said Ambareesh Baliga, a Mumbai-based independent market analyst.
“With the stocks down despite Adani’s rebuttal, it clearly shows some damage on investor sentiment. It will take a while to stabilise,” Baliga added.
Adani Enterprises (ADEL.NS), often described as the incubator of Adani businesses, plunged 20% on Wednesday to bring its losses since the Hindenburg report to nearly $15 billion. Adani Power (ADAN.NS) fell 5%, while Adani Total Gas (ADAG.NS) slumped 10%, down by its daily price limit.
Adani Total Gas, a joint venture between France’s energy major Total (TTEF.PA) and Adani Group, has been the biggest casualty of the short seller report, losing about $27 billion.
Data also showed that foreign investors sold a net $1.5 billion worth of Indian equities since the Hindenburg report – the biggest outflow over four consecutive days since Sept. 30.
Headaches for the Adani Group are expected to continue for some time.
India’s markets regulator, which has been looking into deals by the conglomerate, has also said it will add Hindenburg’s report to its own preliminary investigation.
State-run Life Insurance Corporation (LIC) (LIFI.NS) on Monday said it would seek clarifications from Adani’s management on the short seller report. The insurance giant was, however, a key investor in the Adani Enterprises share sale.
Hindenburg said in its report it had shorted U.S.-bonds and non-India traded derivatives of the Adani Group.