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Indian billionaire Gautam Adani was the world’s third-richest person just a week ago. He’s now (as of writing) down at 17th place… what happened here?
Catch-up: Investment research firm Hindenburg Research published a damning report about Adani and his conglomerate Adani Group, claiming (among other things) it had engaged in manipulation to artificially inflate its stock price.
- Adani Group is a collection of businesses with interests in pretty much every sector imaginable all over the world, from coal mines and cement to airports and media.
- Adani vehemently denied the accusations in a 413-page rebuttal, but investors said “TL;DR” on route to his businesses losing US$108 billion in a week.
What’s happening: Things have gotten worse as Adani called off a separate US$2.5 billion equity sale in his flagship company Adani Enterprises, due to “extraordinary circumstances.”
- The sale was supposed to be something of a vote of confidence in Adani. Now it’s only raised more concerns, with Adani Enterprises’ shares falling 26.7% yesterday.
Why it matters: In the recent past, regulators and other reports have raised many of the same issues about Adani Group that the Hindenburg report has. This time around, alleged shady practices are no longer flying under the radar in the world's fifth-largest economy.
- Hindenburg’s intentions aren’t totally pure—the firm had taken a short position on Adani Group—but it has signalled a tipping point for the conglomerate.
Zoom out: The debacle spells trouble for India’s economy. Adani Group has close ties to India’s ruling party and has been the main engine driving India’s stock indexes. If its freefall continues, panic will set in across financial markets as foreign investors pull out on mass.