Shares of Adani Group’s listed firms slumped on Monday after the Hindenburg Group published a report over the weekend accusing the Indian market regulator’s chief of a conflict of interest that allegedly prevented a proper investigation into the American short seller’s earlier claims of fraud and stock manipulation by the conglomerate.
Key Facts
- Shares of the conglomerate’s flagship firm Adani Enterprises dropped more than 5% to $35.9 (Rs 3,013) after the Indian stock markets opened on Monday, before recovering to $37.42 (Rs 3,145).
- Adani Power’s shares dropped more than 10% to $7.37 (Rs 619), but soon recovered to $8.04 (Rs 675)—down 2.9% from Friday’s closing.
- Shares of the group’s other key listed firms—Adani Energy, Adani Green, Adani Total Gas and Adani Ports—were also hit on Monday, falling between 1-4%.
According to our estimates, Gautam Adani’s net worth is $83.8 billion, down $1.5 billion due to Monday’s selloff. Despite this, he remains both India’s and Asia’s second richest person behind Mukesh Ambani.
Key Background
In a report published on Saturday, New York-based short seller Hindenburg Research alleged Madhabi Puri Buch, the chair of the Securities and Exchange Board of India (SEBI), and her husband, Dhaval Buch, invested in offshore funds linked to Adani in Bermuda and Mauritius.
Adani’s brother Vinod Adani allegedly used these funds to purchase and trade “large positions in shares of the Adani Group,” the report alleged. Buch and her husband made the investments in 2015—two years before she joined SEBI, the report said, citing “whistleblower documents.”
The conglomerate, however, has vehemently denied these allegations and Adani has labeled them as a “malicious” attack on his company and India’s economic growth.
News Peg
Buch responded to Hindenburg’s allegations in a statement on Sunday saying: “The investment in the fund referred to in the Hindenburg report was made in 2015” when the Buchs were “both private citizens living in Singapore and almost 2 years before Madhabi joined SEBI.”
The two consulting companies set up by Buch when she was in Singapore “became immediately dormant on her appointment with SEBI” and were “explicitly part of her disclosures.” The Buchs criticized Hindenburg saying the short seller had been served a “ show cause notice for a variety of violations in India” and in response “they have chosen to attack the credibility of the SEBI and attempt character assassination of the SEBI Chairperson.”
In response Hindenburg tweeted: “Buch’s response now publicly confirms her investment in an obscure Bermuda/Mauritius fund structure, alongside money allegedly siphoned by Vinod Adani. She also confirmed the fund was run by a childhood friend of her husband, who at the time was an Adani director.”
Crucial Quote
India’s opposition parties criticized the government and have called for Buch’s resignation. Rahul Gandhi, the leader of the opposition in the Parliament commented on Hindenburg’s report, saying: “This is an explosive allegation because it alleges the umpire herself is compromised. The savings of millions of Indians…are at risk, it is therefore imperative that this matter is investigated… If investors lose their hard-earned money, who will be held accountable—PM Modi, the SEBI Chairperson, or Gautam Adani?”