US short seller alleges ‘brazen’ fraud by Adani

Wellknown US activist investor Hindenburg Research has alleged that Adani Group was ldquoengaged in a brazen stock manipulation and accounting fraudrdquo a charge rejected by the conglomerateHindenburg a USbased investment research firm that specialises in activist shortselling said its twoyear investigation reveals that ldquothe Rs 178trillion 218 billion Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decadesrdquoThe report comes ahead of a Rs 20000crore followon share sale of Adani Grouprsquos flagship Adani Enterprises The followon public offer FPO is slated to open on January 27 and close on January 31Adani Group said it was shocked to see the report that came out without any attempt to contact it to get the factual matrix It went on to question the timing of the report saying its publication ahead of the FPO ldquoclearly betrays a brazen malafide intention to undermine Adani Grouprsquos reputation with the principal objective of damagingrdquo the issueAlso Read Adani Group moves Kerala High Court seeking central forces protection at Vizhinjam portldquoGautam Adani founder and chairman of Adani Group has amassed a net worth of roughly 120 billion adding over 100 billion in the past 3 years largely through stock price appreciation in the grouprsquos seven key listed companies which have spiked an average of 819 per cent in that periodrdquo the Hindenburgrsquos report saidThe report details a web of Adanifamily controlled offshore shell entities in tax havens spanning the Caribbean and Mauritius to the UAE which it claims were used to facilitate corruption money laundering and taxpayer theft while siphoning off money from the grouprsquos listed companiesldquoOur research involved speaking with dozens of individuals including former senior executives of Adani Group reviewing thousands of documents and conducting diligence site visits in almost half a dozen countriesrdquo it said Hindenburg claimed to have uncovered ldquorudimentary efforts seemingly designed to mask the nature of some of the shell entitiesrdquoldquoEven if you ignore the findings of our investigation and take the financials of Adani Group at face value its 7 key listed companies have 85 per cent downside purely on a fundamental basis owing to skyhigh valuationsrdquo the report said adding key listed Adani companies have also taken on substantial debt including pledging shares of their inflated stock for loans putting the entire group on precarious financial footing CreditSights part of the Fitch Group had in September last year described the group as ldquooverleveragedrdquoAdani stocks sink market by over 137Indian shares fell to their lowest level in over a week on Wednesday dragged by Adani group stocks after a shortseller raised concerns about its debt Stocks of the seven listed Adani group companies fell between 1537 and 937