SYDNEY: A few weeks ago, Gautam Adani was indisputably India’s richest man.
Now his fortune is slipping away as the stocks of his many companies crash, due to the efforts of a relatively obscure United States company named after the 1937 Hindenburg disaster (in which a hydrogen-filled airship caught fire, killing 98 people).
Adani’s personal fortune was an estimated US$150 billion in 2022. He catapulted past the previous richest Indian, Mukesh Ambani, on the back of the meteoric rise of Adani Group, a multinational conglomerate with holdings in mining, energy, airports, cement, food processing and weapons manufacturing.
Since Jan 25, Adani Group’s stock price has fallen by as much as 70 per cent. The catalyst? An explosive report published on Jan 24 by Hindenburg Research, alleging Adani Group engaged in “brazen stock manipulation and accounting fraud scheme over the course of decades”.
What complicates this report is that Hindenburg Research isn’t just a research company. It’s an “activist short seller”, with a financial incentive in seeing Adani’s stock price fall.
Hindenburg makes its profits by identifying “man-made disasters floating around in the market”. It bets on the stock falling, then publicises that company’s negatives – including doing so in Adani’s case, saying “After extensive research, we have taken a short position in Adani Group Companies through US-traded bonds and non-Indian-traded derivative instruments.
Adani’s response includes calling the report a “calculated attack on India” and “intended only to create a false market in securities to enable Hindenburg, an admitted short seller, to book massive financial gain through wrongful means at the cost of countless investors”.