Gautam Adani: This is what happened

Less than two weeks ago, Gautam Adani was the fourth richest person in the world. With an estimated personal fortune of $120 billion, the self-made Indian industrialist is richer than Bill Gates or Warren Buffet.

Later, Hindenburg Research, an American short seller who bet on Adani’s companies, accused him of carrying out “the biggest scam in corporate history”.

Adani’s companies have lost $110 billion in value since, and his own fortune has halved to more than $61 billion as investors withdrew their support.

Although the Adani Group condemned the report as “baseless” and “malicious”, investor questions about its statement persisted and the consequences grew. Adani’s business partners and lenders are clarifying their relationship with the corporation, while India’s federal government is said to be launching an investigation into his business after vehement opposition from opposition legislators.

Here’s what you need to know.


Gautam Adani is a 60-year-old tycoon who founded the Adani Group over 30 years ago.

A college dropout, he built a vast business empire that includes infrastructure, logistics, energy production, and mining. That success has led him to be compared to John D. Rockefeller and Cornelius Vanderbilt, who created vast monopolies during America’s Gilded Age in the 1800s.

He is the richest person in Asia and last September quickly overtook Jeff Bezos to become the second richest person in the world. He is also considered a close ally of Indian Prime Minister Narendra Modi.


Hindenburg Research stunned investors in late January when it released a report accusing Adani and his companies of widespread fraud and “blatant securities manipulation” that they allege took place. for many decades. The company said it was shorting Adani Group companies, meaning they would benefit when their value drops.

Hindenburg posed 88 questions to Adani that cast doubt on the financial health of his corporation. Those requests range from asking for details about the corporation’s offshore entities to why it has “such a complex, interconnected corporate structure.”

Adani Group said it was considering legal action in response to the complaints. It accused Hindenburg of launching “a calculated attack on India” and said the investment firm was only interested in its own financial interests. But analysts say the Adani Group did not convincingly answer the questions raised by the report.


Investors, spooked by claims, are underwriting, not wanting to get caught in the wrong side of a trade. Shares of Adani Enterprises, Adani’s flagship company, have plummeted nearly 55% since the Hindenburg report was released on Jan. 24.

As a result, the company is currently having difficulty raising new capital. On Wednesday, Adani Enterprises abruptly abandoned a $2.5 billion stock sale deal, just 24 hours after it was sealed.

Shares in most of the Adani Group companies fell again on Friday. India’s stock exchanges have suspended trading for five Adani-listed companies after their shares were breached by daily limits, set at 5% and 10%.

Meanwhile, TotalEnergies, a major business partner, said Adani had agreed to have one of the “big four accounting firms” perform a “joint audit”. No confirmation from Adani.

The French energy giant describes its $3.1 billion investment in Adani, through joint investments in India, as “limited”. It also said these partnerships were “made in full compliance with applicable laws – namely of India -.”


The wave of sell-offs is raising questions about how Adani’s businesses will continue to cover costs.

The large amount of debt of the Adani companies – one of the concerns raised by Hindenburg – is under the microscope. Rating agency Moody’s said on Friday that the turmoil was likely to reduce the group’s ability to raise capital.

In a statement Wednesday night, Adani emphasized that his business remains solid and that executives will review their capital markets strategy “once the market stabilizes.”

“Our balance sheet is very healthy with strong cash flow and safe assets, and we have a perfect track record of paying off our debts,” he said.

The aftermath of the sell-off may not affect Adani. Indian banks holding Adani Group assets could also be affected if the value of those holdings continues to decline.

The Reserve Bank of India said on Friday that the banking sector “remains resilient and stable” based on its latest assessment and pledged to continue to monitor the situation.

In its first statement of recent market turmoil, the Securities and Exchange Commission of India (SEBI) said on Saturday that it had observed “extraordinary price volatility for the shares of India” a business corporation.” It states that if any information is notified by SEBI, “it will be checked and ‘appropriate action’ will be taken.

The market regulator added that it is “committed to ensuring market integrity.”


At the same time, this ordeal is a source of growing political instability in New Delhi.

Opposition lawmakers in India have demanded an investigation into Hindenburg’s report. They held a rally in the country’s parliament on Wednesday while the country’s finance minister presented the annual budget.

Their request that normal business be suspended on Friday to allow for an emergency debate on the Adani crisis led to an uproar, which resulted in the suspension of both houses of parliament. until Monday.

“Action is being taken against Adani worldwide, but Prime Minister Modi is silent,” the main opposition party of Parliament wrote on Twitter. “When will our government act?”

Questions about the health of the Adani empire are clouding the prospects of India Inc., which just a few weeks ago went into effect at the World Economic Forum in Davos, Switzerland to tout opportunities for the future. foreign investors.

The country’s emissaries rely on its relatively strong economic outlook. The World Bank predicted last month that India would record the strongest economic growth of any major economy this year.

Manish Chowdhury, head of research at brokerage Stoxbox, said: “The Adani story opens a huge wormbox. “The India story now looks weak” to foreign investors, he added.

— Diksha Madhok and Allison Morrow contributed reporting.

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