Adani Group is an Indian multinational conglomerate, headquartered in Ahmedabad. It was founded by Gautam Adani in 1988 as a commodity trading business, with the flagship company Adani Enterprises. The Group’s diverse businesses include port management, electric power generation and transmission, renewable energy, mining, airport operations, natural gas, food processing and infrastructure. Adani Group employs over 100,000 people worldwide.
In April 2021, Adani Group became the third Indian conglomerate to cross US$100 billion in market capitalisation. It crossed the market capitalisation of US$200 billion in April 2022, becoming the third Indian conglomerate after Tata Group and Reliance Industries to do so. In November 2022, Adani Group market capitalization reached top $280 billion (INR 24 trillion) surpassing Tata Group.
Issuance of Adani Group’s FPO
The Follow-on Public Offer (FPO) of Adani Enterprises Limited is going to open on 27th January 2023 and the FPO will remain open for subscribers until 31st January 2023. Adani Enterprises FPO price has been fixed at ₹3,112 to ₹3,276 per equity share. The Adani group company aims to raise ₹20,000 from its follow-on offer.
Bloomberg has reported that Middle East investors including International Holding Co PJSC and Abu Dhabi Investment Authority are bidding to buy stock in the FPO sale which is being floated by Adani Enterprises.
News of fraud
A report by Hindenburg Research (which is a forensic financial research firm) makes a claim that the Adani Group has engaged in a pure stock manipulation and accounting fraud scheme over the past decades. Hindenburg Research has been spontaneously investigating into this matter for the past 2 years.
Gautam Adani, who is the founder and chairman of the Adani Group has a net worth of around $120 billion. His net worth has increased by more than $100 billion in the last 3 years mainly due to the growth in stock prices of the group’s seven major publicly traded companies. These companies have skyrocketed by an average of 800 percent during the past 3 years.
Countless people along with the former Adani Group senior executives have been interviewed for the research, several documents were examined, and rigorous site visits were made in about a dozen different nations.
The report states that “Considering the financials of the Adani Group at face value, its seven key listed companies have an 85% downside purely on a fundamental basis owing to sky-high valuations”.
The major listed Adani companies have accumulated a shockingly unusual and high debt. The group has pledged shares of their inflated stock as a collateral for loans, which puts the group’s overall financial situation a tremendously risky situation.
The Adani Group has faced the wrath of four major government fraud investigations which have estimated to have plough about US$ 17 billion. These incidents consist of allegations of money laundering, theft of tax dollars, and corruption.
Hindenburg Research reported that “Adani family members allegedly cooperated to create offshore shell entities in tax-haven jurisdictions like Mauritius, the UAE, and Caribbean Islands, generating forged import/export documentation in an apparent effort to generate fake or illegitimate turnover and to siphon money from the listed companies”.
The stock market reacted to this news with the seven major Adani Group stocks losing around ₹46,000 crore in market capitalization on 24th January 2022.
You can read the news report here.
Adani Group’s response
Adani Group has remarked the Hindenburg Research report on their group as “A malicious combination of selective misinformation and stale” after the US short seller revealed it held short positions in the group and made wide-ranging accusations.
Adani Group CFO Jugeshinder Singh said in a statement that “We are shocked that Hindenburg Research has published a report on 24 January 2023 without making any attempt to contact us or verify the factual matrix. The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts”.
The Adani Group CFO continued with his statement that “The timing of the report’s publication clearly betrays a brazen, mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming follow-on public offering from Adani Enterprises, the biggest FPO ever in India. The investor community has always reposed faith in the Adani Group on the basis of detailed analysis and reports prepared by financial experts and leading national and international credit rating agencies. Our informed and knowledgeable investors are not influenced by one-sided, motivated and unsubstantiated reports with vested interests”.
The CFO made his conclusion for the statement by saying that “The group has always been in compliance with all laws, regardless of jurisdiction, and maintains the highest standards of corporate governance”.
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