Following the Hindenburg controversy and subsequent investigation by markets regulator Sebi on allegations of share price manipulation, the 61-year-old tycoon saw the highest decline in his personal wealth globally, data from Bloomberg Billionaires Index shows.
In pre-Hindenburg days, the maverick businessman’s wealth saw a gravity-defying one-way movement that took him to the position of world’s second richest man for a brief period. With his fortune being estimated at around $85 billion, Adani is now the second richest Indian after Mukesh Ambani.
In the world order of billionaires, the school dropout now stands at the 15th spot after losing over 29% of his wealth in the worst crisis faced by the apples-to-airport conglomerate’s history.
The combined market capitalisation of all 10 listed Adani stocks has now fallen to about Rs 14 lakh crore from over Rs 19 lakh crore before the Hindenburg report was released.
At one point during the year, almost 60% of Adani’s wealth was wiped off following non-stop selling of Adani stocks. The first sign of relief for the business tycoon came on March 2 when US-based GQG Partners picked stakes worth Rs 5,460 crore in 4 Adani stocks. Since then, the fund house, run by NRI Rajiv Jain, has been increasing stakes in Adani stocks.
The Ahmedabad-based conglomerate has also been raising cash to manage debt, which was not only highlighted in the Hindenburg report but has also been an investor concern in the past. At the end of the September quarter, Adani group’s total net debt reduced to Rs 180,371 crore. Its net debt to trailing-12-month EBITDA stood at 2.5x, lowest in the last 10 years.In the last few weeks, Adani stocks have rallied on the back of BJP’s win in three state assembly elections of MP, Rajasthan and Chhattisgarh. Investor confidence also boosted after the US government concluded that Hindenburg’s allegations of corporate fraud weren’t relevant before extending the conglomerate as much as $553 million for a container terminal in Sri Lanka.
Last month, the Supreme Court reserved its order on a batch of pleas concerning the Adani-Hindenburg row on allegations of stock price manipulation, saying it cannot ask a statutory regulator to take as a “gospel truth” something which was published in the media.
“We don’t have to treat what is set out in the Hindenburg report as ipso facto (automatically) a true state of affairs. That is why we directed the SEBI to investigate. Because for us to accept something which is in the report of an entity, which is not before us and whose veracity we have no means of testing, would really be unfair,” the SC bench headed by Chief Justice D Y Chandrachud had said.
Sebi investigation had earlier found that some entities took short positions prior to the publication of the Hindenburg report and profited from squaring off their positions after the price crashed later on.
Between January 24 and February 27, the market capitalisation of Adani stocks saw significant erosion in value terms – around Rs 12.4 lakh crore. This was reduced further to Rs 10 lakh crore by March 9.
While acting on PILs made in the aftermath of the Hindenburg report, the apex court had formed a six-member panel headed by former Supreme Court judge Justice AM Sapre that filed a report in May saying it cannot conclude whether there was any regulatory failure on the part of Sebi.
“At this stage, taking into account the explanations provided by Sebi, supported by empirical data, prima facie, it would not be possible for the committee to conclude that there has been a regulatory failure around the allegation of price manipulation,” the six-member panel had said.
The embattled billionaire has described the Hindenburg report as a combination of targeted misinformation and outdated, discredited allegations aimed at damaging the group’s reputation and generating profits through a deliberate drive-down of stock prices.
“The short-selling incident resulted in several adverse consequences that we had to confront. Even though we promptly issued a comprehensive rebuttal, various vested interests tried to opportunistically exploit the claims made by the short seller,” Adani had said.
In a 106-page report on January 24, Hindenburg had called Adani’s rise to the riches as the “largest con in corporate history” and made serious claims around stock manipulation and accounting fraud schemes by the self-made billionaire over the course of decades.
Given the group’s continued focus on debt reduction and business growth prospects, Adani bulls are waiting for the Hindenburg stain to get washed off in 2024.
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