NEW DELHI (Reuters) – India’s Adani Group issued a detailed backlash against a Hindenberg Research report on January 30, sending its shares crashing $48 billion.
The conglomerate, headed by Indian billionaire Gautam Adani, Asia’s richest person, said last week’s Hindenburg report said it would allow US-based short sellers to book profits without citing evidence. It is an object.
For Adani, 60, the stock market meltdown is a dramatic setback for the school dropout who has surged in recent years to become the third richest man in the world, but last week Forbes Ranked 7th on the rich list.
Adani Group’s response comes as its flagship company, Adani Enterprises. (ADEL.NS)moving forward with $2.5 billion stock saleThis has been overshadowed by the Hindenburg report. Concerns reported On debt levels and the use of tax havens.
“All transactions entered into by the Company with entities that are considered ‘related parties’ under Indian law and accounting standards are duly disclosed by the Company.”
“This is fraught with conflicts of interest, creating a false market in securities so that Hindenburg, which allows short-selling, can make huge financial gains through illicit means at the expense of countless investors. It is intended only for
Hindenburg said on its website that Adani’s “response largely confirmed our findings and ignored our key questions.” He reiterated shorting Adani Group through US-traded bonds and non-India-traded derivatives.
That report questioned how the Adani Group uses offshore entities in tax havens such as Mauritius and the Caribbean islands, and that certain offshore funds and spin-off companies have sold stakes in Adani’s listed companies. He added that he “secretly” owns
According to Adani, the investigative report makes “misleading claims about offshore entities” without any evidence.
Hindenburg said it “found that Adani lacked a direct and transparent response” to the allegation that offshore entities were used to “communicate.”
Adani said on Thursday that he was considering taking action against Hindenburg. Hindenburg said on the same day that it would welcome such a move.
The Hindenberg report also found that five of Adani’s seven major publicly traded companies reported a liquidity ratio, a measure of current assets minus short-term liabilities, of less than 1, citing “short-term liquidity risk. is rising,” he said.
Adani’s major listed companies are ‘highly indebted’, the entire group is on a ‘precarious financial base’, and the shares of Adani’s seven listed companies are at ‘extremely high valuations’. It’s down 85% because of what it’s calling.
Adani’s response said that over the past decade, the group has “consistently de-leveraged.”
The Adani Group defends the practice of pledging the shares of the founders (or major shareholders), stating that raising funds against shares is a common practice globally, and that large institutions and banks have It said it bases its loans on credit analysis.
The group said India has a robust disclosure system in place and promoter pledge positions across portfolio companies were over 50% in some listed stocks in March 2020, but increased to added that it had fallen to less than 20%.
“Sail Through”
The Hindenburg Report and its implications are seen as one of the greatest career challenges faced by billionaires with business interests ranging from ports, airports, mining and power to media and cement.
Adani’s response included an appendix of over 350 pages containing extracts from annual reports, public information and previous court decisions.
Adani said Hindenburg sought answers to 88 questions in the report, 65 of which related to issues Adani’s portfolio companies disclosed in their annual reports.
Adani said the rest related to public shareholders and third parties, and some were “unsubstantiated claims based on fictitious fact patterns.”
“Adani was unable to answer 62 out of 88 questions clearly,” says Hindenburg.
Hindenburg is known for short-circuiting electric truck maker Nikola Corp. (NKLA.O) and Twitter.
Adani also responded to Hindenburg’s claims about the company’s auditors, saying, “All auditors with whom we have been involved are duly accredited and qualified by the relevant statutory bodies.”
The reaction comes just hours before the opening of the Indian market, when the $2.5 billion secondary share sale will begin on the second day of the offering. Friday’s plunge sent Adani Enterprises’ share price below its issue price, calling into question its success.
In a separate statement on Sunday, Adani Group chief financial officer Jugeshinder Singh said the company is focused on selling its stake and is confident it will be successful. and said it was continuing to invest.
“I am confident that the FPO[follow-on public offering]will also work,” he said.
Reported by Aditya Kalra, Aditi Shah, Jayshree Upadhyay and Anirudh Saligrama of Bangalore.Edited by Kevin Liffey, Alexander Smith and Murarikmar Anantaraman
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