BENGALURU (Reuters) – Hindenberg Research said it has a short position in India’s Adani Group. It accused the conglomerate of misusing offshore tax havens and expressed concern on Wednesday about the massive debt that has eroded the assets of $11 billion of investors.
The group, led by Gautam Adani, the world’s third richest person, has dismissed claims of US short sellers as unsubstantiated, tarnishing its reputation ahead of a big stock sale, according to Forbes. I said it was time.
Adani Enterprises, the Group’s flagship company (ADEL.NS)will launch the country’s largest public offering on January 27. $2.5 billion To fund capital expenditures and repay debts.
Hindenburg, known for short-circuiting electric truck maker Nikola (NKLA.O) and Twitter said it holds short positions in Adani companies through US-traded bonds and non-India-traded derivatives.
The scathing report questioned how the Adani Group has used offshore entities located in offshore tax havens such as Mauritius and the Caribbean islands, and identified specific offshore entities associated with the Adani Group. It added that funds and shell companies “secretly” own shares in Adani-listed companies.
It also said that major Adani-listed companies had “large amounts of debt” and that the entire group was on a “precarious financial base”, adding that the shares of the seven Adani-listed companies were It claimed to be down 85% on a fundamental basis because of what it called “Sky.”・Highly rated.”
Jugeshinder Singh, chief financial officer of Adani Group, said in a statement that the company was shocked by the report, calling it “selective misinformation and stale, unsubstantiated and discredited claims. A malicious combination of
“The Group has always complied with all laws,” the company said, without elaborating on Hindenberg’s specific allegations.
“The timing of the report’s publication clearly betrays the brazen and malicious intent of damaging the Adani Group’s reputation, primarily to undermine an upcoming additional public offering from Adani Enterprises,” it added. .
Stock of Adani Transmission (ADAI.NS) Adani port and SEZ down 9% (APSE.NS) It fell 6.3%, with Adani Enterprises down 1.5%. Combined, the seven publicly traded group companies lost $10.73 billion in market capitalization.
In the bond market, USD-denominated bonds issued by Adani Green Energy (ADNA.NS) The dollar fell nearly 15 cents to just under 80 cents, with international bonds issued by Adani Ports And Special Economic Zone, Adani Transmission and Adani Electricity Mumbai seeing a similar drop, according to Tradeweb data.
reports agreed bid The company is eyeing a secondary stake sale in Adani by Wednesday’s anchor investors, notably participation in stock exchange filings from Maybank Securities and the Abu Dhabi Investment Authority.
Hindenburg said the research report is based on two years of research that included conversations and document reviews with dozens of individuals, including former executives of the Adani group.
India’s capital markets regulator, the Securities and Exchange Commission of India, did not immediately respond to a request for comment.
Adani has repeatedly dismissed debt concerns.Shin told the media Jan. 21, “No one has raised any concerns about the debt, not even a single investor.”
According to Hindenberg’s report, five of Adani’s seven major publicly traded companies report current ratios (a measure of current assets minus short-term liabilities) of less than one.
For the financial year ended 31 March 2022, Adani Group’s total gross debt increased by 40% to Rs 2.2 trillion.
Adani Group’s 7 major listed Adani companies have more debt than their equity, including Adani Green Energy Ltd, according to Refinitiv data (ADNA.NS) More than 2,000% above equity capital.
Creditsights, part of Fitch Group, described Fitch Group as “overleveraged” last September. The report later corrected some calculation errors, but CreditSights said he remained concerned about Adani Group’s leverage.
Mr Hindenburg also said he was concerned that a large proportion of the shares held by promoters or major shareholders of Adani Group listed companies were pledged for financing.
“Equity collateral is an inherently volatile source of lending collateral,” the report states. Founded by Nathan Anderson in 2017Hindenburg looks for “man-made disasters” in businesses, such as accounting fraud and poor management.
Last year, the Adani Group acquired cement company ACC. (ACC.NS) and Ambuja Cement (ABUJ.NS) From Holcim, Switzerland (HOLNS) at $10.5 billion. A few days later, the company pledged shares in his two companies, then worth about $12.5 billion, to banks and struck a no-disposal agreement that prevented the shares from being sold until the lenders agreed to pay the debt.
ACC and Ambuja shares each fell more than 7% on Wednesday.
Reporting by Chris Thomas, Aditya Kalra and Mrinmay Dey. Additional reporting by Miyoung Kim. Edited by Edwina Gibbs, Louise Heavens, Kirsten Donovan
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