Adani sell-off hits $42bn after short seller targets group

A sell-off of Adani Group shares deepened on Friday, taking losses this week to more than $42bn since a short seller report targeted the Indian conglomerate headed by one of the world’s richest men.

The rout comes as Gautam Adani, the group’s billionaire founder, pushes ahead with a Rs200bn ($2.4bn) share sale, intended to demonstrate that the company can attract global investors.

The allegations in the short seller report by Hindenburg Research follow several years of breakneck expansion by the sprawling industrial group that has sent its valuation soaring and catapulted Adani into the ranks of billionaires Bernard Arnault, Elon Musk and Jeff Bezos.

Shares in Adani Enterprises, the group’s flagship listed company which is conducting the equity offering, fell as much as 10 per cent in Mumbai to a low of Rs3,050.

The intraday low touched by shares in the flagship company reflected an almost 7 per cent discount to the price per share of Rs3,276 paid by anchor investors already involved in the deal, including London-listed Jupiter Asset Management, BNP Paribas, Société Générale and Goldman Sachs.

Losses were sharper among some of the six other listed Adani Group companies, with Adani Green Energy falling as much as 20.1 per cent, while Adani Transmission shed as much as 19.8 per cent.

Those falls took the total losses in market capitalisation for Adani Group stocks to almost Rs3.5tn ($42.6bn) since the publication of short seller Hindenburg Research’s report earlier this week.

Adani is pressing ahead with the follow-on offering after the group’s seven listed companies already shed close to $11bn in market capitalisation on Wednesday following allegations from Hindenburg that the group had engaged in share price manipulation and fraud. Books close on Tuesday.

Adani Group has denied the allegations, calling the report “a malicious combination of selective misinformation and stale, baseless and discredited allegations” intended to “undermine the Adani Group’s reputation” and damage demand for the share sale.

A self-made tycoon who started as a commodities trader, Adani built India’s largest private infrastructure group. He owns substantial stakes in all of the group’s listed companies, including a roughly three-quarters stake in Adani Enterprises.

Adani has said it is considering legal action against Hindenburg. A subsequent response from Hindenburg said the group “would welcome it”.

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

Bill Ackman, the billionaire hedge fund manager, on Thursday described Hindenburg’s report as “highly credible” and “extremely well researched”.

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