Adani Group says short seller’s report was ‘calculated attack on India’

India’s Adani Group has published an angry rebuttal to allegations of wrongdoing by short seller Hindenburg Research that wiped more than $50bn from its value last week, seeking to calm investors in the midst of a $2.4bn share sale.

In the document, which has 54 pages plus some 350 more of appendices, the group, an industrial conglomerate owned by billionaire Gautam Adani, said Hindenburg’s report had “caused serious and unprecedented adverse impact on our investors”.

It added that the allegations were “not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India”.

New York-based Hindenburg last week published the findings of a two-year investigation, in which it alleged that Adani had engaged in “brazen stock manipulation and accounting fraud” over decades.

By the end of trading on Friday, the report had wiped more than $50bn off the value of the Adani Group’s listed companies. Shares in Indian banks and insurers with exposure to the business also fell.

Adani Enterprises, one of the group companies, said over the weekend that its follow-on public offering of shares would proceed as planned, despite concerns that it would struggle to attract investors.

The offering was intended to widen the shareholder register of the sprawling industrial group, much of which is currently owned by related entities and Mauritius-based funds.

Adani Enterprises closed at 2,761.45 rupees on Friday, well below the price band of Rs3112 to 3276 set for the share sale.

The FPO was launched on Friday, and books are set to close on Tuesday.

“There is no change in either the schedule or the issue price,” Adani said on Saturday. “All our stakeholders including bankers and investors have full faith in the FPO. We are extremely confident about the success of the FPO.” 

The short seller challenge to the group is being watched across India’s business community: the company has wide-ranging interests across the economy, including energy, ports and airports, mining, oil and gas, and mining.

It is one of India’s largest private infrastructure groups and before the sell-off, Gautam Adani was the world’s third-richest person.

Adani’s rebuttal stated that “not one” of 88 questions put forward by Hindenburg “is based on independent or journalistic fact finding. They are simply selective regurgitations of public disclosures or rhetorical innuendos colouring rumours as fact.”

It addressed many of the questions in batches, dismissing them as “disproven” and “baseless allegations” or “misleading claims”, while others were singled out for longer answers, supported by almost 360 pages of scanned documents, tables and citations.

The group also dismissed questions about the company’s debt-fuelled growth model, stating that the “leverage ratios of Adani Portfolio companies continue to be healthy and are in line with the industry benchmarks of the respective sectors”.

It had earlier said it was considering legal action against Hindenburg, whose past targets have included the electric vehicle company Nikola and Twitter.

Hindenburg last week said it “would welcome” legal action. “If Adani is serious, it should also file suit in the US, where we operate,” the short seller said. “We have a long list of documents we would demand in a legal discovery process.”

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