India: Adani Firms Lose $65B From Market Value

Facts

• Shares of India's Adani firms — led by Asia's richest man Gautam Adani — sank between 5% and 20% on Monday, wiping out approximately $65B off its market value.
• Flagship Adani Enterprises' $2.5B secondary share sale closed at ₹2,892.85 ($35.47), 7% below the ₹3,112 ($38.17) lower end of the offer price band due to based on the weakened sentiment among investors.
• However, after Abu Dhabi conglomerate IHC announced it would invest $381.17M in Adani Enterprises' follow-on public offer worth $2.5B, shares gained 5.26%. However, entities including Adani Total Gas, Adani Green, Adani Transmission, Adani Wilmar, and Adani Power extended their fall.
• Adani now occupies the eighth spot with a total net worth of $89.1B, per the Forbes real-time billionaires list.
• The crash follows a report by US short-seller Hindenburg Research last week, which flagged concerns about Adani firms' mounting debts, stock manipulation, improper use of tax havens, and money laundering.
• Adani suggested the report is a "malicious combination of selective misinformation and concealed facts to drive an ulterior motive," while Hindenburg alleges "India's future is being held back" by the firm's alleged corruption.

Sources: Reuters (a), Al Jazeera, Reuters (b), Forbes, Hindenburg Research, and Barand Bench.

Narratives

• Narrative A, as provided by Bloomberg. Hindenburg is a well-respected research outlet in New York's finance circles. Its reports are usually highly credible and extremely well-researched. Allegations of financial irregularities in one of India's largest conglomerates cannot be brushed under the carpet. Hindenburg's research is just the tip of the iceberg; it's a reminder that many Indian companies may be using the same dirty tactics to cement control, boost their valuation, and fuel their expansion with debt.
• Narrative B, as provided by The Guardian. This is an unwarranted, calculated attack on India and the independence, integrity, and quality of Indian institutions. Hindenburg Research's allegations are nothing short of a calculated securities fraud by a short-seller. Their modus operandi behind the explosive report is working, with Adani firms losing over $65B in market value over three trading days. Public investors lost a great deal by wiping off a large amount of investor wealth, while Hindenburg shamefully made a windfall.