Gautam Adani’s rollercoaster ride: From Hindenburg’s hit to historic comeback

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In late January 2023, Hindenburg Research, a US-based short-selling firm, caused a stir in the financial world with its report targeting Gautam Adani, who was then Asia’s wealthiest individual. The report accused Adani Group, the apples to airport conglomerate, of “brazen stock manipulation and accounting fraud scheme over the course of decades”. This allegation triggered a nosedive in the share prices of Adani Group companies, erasing over $100 billion in market value.

The immediate fallout
Gautam Adani, who was the richest Indian, riches Asian and a prominent figure on the global billionaire list, saw his wealth plummet, pushing him out of top 20 spots in the Forbes and Bloomberg billionaire lists.The group’s seven listed firms lost about half their market value, a staggering decline from over $200 billion to nearly $100 billion.
Adani’s countermove
The Adani Group vehemently denied the allegations, issuing a 413-page response. They framed the attack as not just against the company but as “a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India”. Despite the robust defense, the group faced a significant challenge in restoring investor confidence.
Navigating the turbulence
The weeks following the report were tumultuous for the Adani Group. Stocks fluctuated wildly, with moments of recovery quickly overshadowed by further declines. The group’s flagship company, Adani Enterprises, saw its stock price halve from its value before the publication of the Hindenburg report.
Adani Enterprises canceled its $2.5 billion share sale in February, a dramatic turn of events as the fallout from a US short-seller’s critique continued to erase billions from the Adani stocks. “Given these extraordinary circumstances, the company’s board felt that going ahead with the issue will not be morally correct,” Gautam Adani said in a statement.
Strategic financial maneuvers
In an effort to stabilize the situation, Adani Group announced the repayment ahead of schedule of a $1.1 billion loan. This move provided a temporary boost to share prices, but the momentum was short-lived as reports of a margin call on the loan emerged.
Regulatory and index repercussions
The fallout extended beyond stock prices. Adani Enterprises was removed from the Dow Jones Sustainability Indices and struck off the bond collateral lists of major banks like Credit Suisse, Standard Chartered, and Citibank. These developments underscored the broader implications of the Hindenburg report on the group’s reputation and financial standing.
The path to recovery
Despite the initial turmoil, Gautam Adani’s financial journey took a turn for the better. Through strategic business decisions and market dynamics, Adani began to reclaim lost ground.
Rajiv Jain: Contrarian comes to rescue

  • And then came Rajiv Jain. Ajit Jain’s firm GQG Partners Inc made an investment of $1.87 billion in the Adani group in March last year. The acquisition of shares by the Jain’s firm represented the first significant investment in Adani’s conglomerate since the Hindenburg report. GQG chairman Rajiv Jain had told Reuters the firm had carried out its own “deep dive” into Adani and disagreed with Hindenburg’s report.
  • In an April interview with Bloomberg, Jain, known for his unconventional approach in purchasing Adani shares in March, mentioned that these investments “could be multibaggers” within a timeframe of five years.
  • Jain, a specialist in emerging markets, has seen considerable gains from the substantial increase in the share prices of companies owned by Indian magnate Gautam Adani. As per a Bloomberg report, the GQG’s investments in the Adani Group, which started at around $1.9 billion and were added to over time, had escalated to over $7 billion in December itself.

US decides to invest in Adani port
Next in November, the United States decided to offer $553 million in funding for a port terminal in Sri Lanka’s capital, a project spearheaded by Gautam Adani. According to a Bloomberg report, before approving up to $553 million for a container terminal in Sri Lanka developed by Adani’s firm, the US government determined that the accusations of corporate fraud leveled by short-seller Hindenburg Research against Adani did not pertain to his conglomerate’s ports subsidiary. This gave a further boost to stocks of Adani Group.
SC backs Sebi, refuses probe by CBI or SIT

  • In a significant ruling that brought further relief to the Adani Group, the Supreme Court January 3 decided that the fraud accusations against the diverse conglomerate, do not require further investigation by either a special investigation team or the CBI. The court extended the deadline for the capital market regulator Sebi to complete its ongoing investigation, which has been in progress for over two years, by an additional three months.
  • The top court, with a three-judge bench including Chief Justice D Y Chandrachud and Justices J B Pardiwala and Manoj Misra, dismissed requests for a third-party probe into the allegations of accounting fraud and stock manipulation made by US short seller Hindenburg Research. The bench stated that Sebi’s “comprehensive investigation” was proceeding satisfactorily and that its approach “inspires confidence”.
  • Originally, on May 17, the Supreme Court had instructed Sebi to finalize its investigation into two dozen cases against the Adani group by August 14, 2023. In August of that year, SEBI requested an additional 15 days to conclude the investigation into seven of the 24 pending issues.
  • By November of the previous year, Sebi informed the court that it would not seek any further extensions and that its investigation into 22 issues had been completed.
  • On January, the Supreme Court directed the market regulator to expedite the completion of the two remaining investigations, aiming to conclude them within the next three months, if possible.
  • The court, while rejecting the petitions filed by public interest litigants, stated that the circumstances of this case “do not warrant” an investigation by an SIT or CBI, despite having the authority to transfer the probe.
  • Gautam Adani welcomed the verdict, expressing his belief that “truth” has triumphed.

Reclaiming the throne

  • The SC’s decision led to a remarkable increase in Adani’s wealth, amounting to $13.3 billion — the largest such gain globally this year. This comes after Adani experienced one of the most significant wealth declines in 2023. Following a tumultuous period in wealth rankings last year, Gautam Adani has once again become Asia’s richest individual, just days after the Supreme Court ruled out the need for new investigations into the explosive allegations by Hindenburg Research against his business empire.
  • As per a Bloomberg report, in a single day, Adani’s net worth surged by $7.7 billion, reaching $97.6 billion, which propelled him back to the top position in Asia, surpassing fellow Indian Mukesh Ambani. As per the Bloomberg Billionaires Index, Ambani, who heads Reliance Industries Ltd., is now slightly behind with a net worth of $97 billion.
  • However, despite this recent surge, Adani’s net worth has not completely rebounded from the impact of the short-seller’s allegations. Prior to the release of Hindenburg’s report on January 24, his net worth stood at $118.9 billion.

The bigger picture
From the precipitous loss of over $100 billion following the Hindenburg Research report to the triumphant recovery and reclaiming of his status as Asia’s richest person again, the business journey Gautam Adani is a prime example of the volatility and unpredictability of the business world. At the same time, it highlights the impact of investigative reports on market perceptions and the importance of corporate governance and transparency.
(With inputs from agencies)

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