Adani Group stocks in free fall as US billionaire Bill Ackman calls Hindenburg’s fraud report ‘highly credible’
- Short seller Hindenburg Research has accused Indian tycoon Gautam Adani’s companies of committing corporate malpractice, triggering a US$12 billion wipeout in market value
- Billionaire investor Ackman said he found the report ‘extremely well researched’ while Adani Group told investors the assertions of accounting fraud were ‘devoid of facts’
Shares of Adani Group’s companies plunged on Friday, extending a sell-off that began after US short seller Hindenburg Research said it took a short position in certain securities of the conglomerate and accused firms owned by Asia’s richest man of fraud.
Billionaire Gautam Adani’s flagship firm Adani Enterprises Ltd. lost as much as 6.2 per cent in early trading in Mumbai. Some group stocks, including Adani Green Energy Ltd. and Adani Transmission Ltd., slumped more than 15 per cent. Friday’s early price action points to a likely bigger rout in group shares after a US$12 billion wipeout in market value on Wednesday. Indian markets were shut on Thursday.
“It seems like there might be more downside and this report can become a big legal issue as it is causing reputational damage too,” said Sameer Kalra, founder of Target Investing in Mumbai. “If it goes ugly, Adani Ports and Adani Wilmar are less leveraged stocks in terms of the cash flows that they generate.”
Hindenburg issued a report on Tuesday making wide-ranging allegations of corporate malpractice following a two-year investigation into the tycoon’s companies. Adani Group is exploring legal action against Hindenburg for its “maliciously mischievous, unresearched” report, Jatin Jalundhwala, legal head for the group, said in a statement earlier in response.
Meanwhile, US billionaire investor and Pershing Square’s CEO Bill Ackman found the Hindenburg report on Adani Group companies “highly credible and extremely well researched,” he said in a Twitter post.
“Adani’s response to Hindenburg Research is the same as Herbalife’s response to our original 350-page presentation,” Ackman said, referring to his ill-fated short-selling campaign that lasted more than five years against the weight-loss shakes seller.
Companies linked to Adani Group plan a detailed response on Friday to the report that they labelled as “bogus,” according to bondholders who joined a conference call with Adani executives. On the call, investors were told that the US-based short seller’s assertions of accounting fraud were “devoid of facts.”