Following allegations of “brazen” corporate fraud made by a US investment firm, shares of Gautam Adani, the richest man in Asia, fell precipitously on Friday, bringing this week’s losses to $45 billion.
The 60-year-old Adani started the week as the third-richest person in the world, but he has since dropped to seventh place on Forbes’ billionaires index after taking a $22.6 billion fall to his wealth on Friday’s trade.
Over the course of the day’s trading in Mumbai, his flagship company Adani Enterprises fell by over 20 percent, briefly setting off an automatic trading halt. It then somewhat recovered to close 18.52 percent lower.
Trading was also halted in five other group companies, with shares in Adani Total Gas, Adani Green Energy and Adani Transmission falling 20 percent apiece and triggering their own stock exchange circuit breakers.
“Obviously this is panic-selling,” JM Financials equity research chief Ashish Chaturmohta told AFP, adding that traders were creating fresh short-sell positions to protect previously made bullish bets on Adani stocks.
In a study released this week, Hindenburg Research said that Adani Group had manipulated results and concealed related-party transactions to “keep the image of financial health and solvency” of its listed business entities.
The company said that just as it was getting up for a significant fundraising round, Hindenburg launched a “maliciously mischievous” reputational war on it.
Hindenburg’s short position in the company, which was disclosed in the report’s release, was evidence, according to legal chief Jatin Jalundhwala, that the corporation had a vested interest in bringing down the price of Adani equities.
He stated that Adani was looking into taking legal action against the research advisory as punishment.
Hindenburg responded that Adani had ducked the issues its research had raised and instead resorted to “bluster and threats”.
“If Adani is serious, it should also file suit in the US,” the firm said in a statement. “We have a long list of documents we would demand in a legal discovery process.”
Shares in Adani’s business entities have increased by as much as 2,000 percent over the previous three years, boosting the founder’s net worth by more than $100 billion and catapulting him into the top one percent of the world’s richest people.
Adani, who reportedly has a net worth of $96.6 billion, is regarded as a close ally of Prime Minister Narendra Modi.
According to the research, because of decades of “government indulgence for the group,” lawmakers, journalists, investors, and everyday people have been afraid to speak out against the gang’s behavior out of concern for retaliation.
“The issues strike at the heart of the Indian corporate sector scene where a number of family controlled conglomerates dominate,” Gary Dugan, chief executive officer of the Global CIO Office, told Bloomberg.
“By their very nature they are opaque, and global investors have to take on trust the issues of corporate governance.”
