by Adani Group has published a 413-page rebuttal of fraud allegations by Hindenburg Research, comparing the US investment firm’s report to an attack on India amid growing financial pressure on the coal conglomerate.
The long response seeks to calm investor concerns and stoke nationalistic fervor as Adani seeks to complete a $2.5 billion share sale, one of India’s largest-ever fundraising campaigns, designed to fund capital spending and reduce debt.
“This is not just an unwarranted attack on a specific company, but a calculated attack on India, the independence, integrity and quality of Indian institutions, and India’s growth history and ambitions,” the Adani response said.
“The claims and insinuations, presented as fact, spread like wildfire, wiped out a large amount of investor wealth and made a profit for Hindenburg. The net result is that public investors lose and Hindenburg gets a windfall.”
Adani’s response (PDF) was published hours before Indian markets reopened on Monday, after a nearly $50 billion drop in the combined value of the conglomerate’s units in wild trading last week.
Hindenburg’s report claimed that the Adani empire was the “biggest fraud in corporate history” engaged in a “seedy stock manipulation and accounting fraud”. It also accused Adani of loading companies with debt that has put the entire group on a “precarious financial footing”.
The US company cited a series of transactions related to Adani’s Carmichael mine and rail operations in Queensland which it alleged may have allowed Adani to avoid disclosing to investors that some of its Australian assets had lost value – a charge the Indian conglomerate disputes.
Adani said in its published response that the transactions were compliant and on arm’s length terms.
The short-seller’s allegations have stripped billions of dollars of value from the sprawling empire of Gautam Adani, who was the world’s third-richest man until more than $22 billion was wiped from his personal net worth as a result of the report. The Indian industrialist is now the world’s seventh richest, according to Forbes.
The problem has weighed on the broader Indian market, dampening otherwise strong recent returns for emerging markets.
Hindenburg disclosed that it took a short position in Adani companies before publishing the report. Activist funds like Hindenburg use financial instruments to profit from falling share prices in the companies they target, which they believe are grossly overvalued and have poor or fraudulent business practices.
Named after the 1937 airship disaster, the Hindenburg looks for stocks that might crash.
Adani’s lengthy statement contains answers to questions raised by Hindenburg, as well as supporting documents such as court decisions and excerpts from company reports.
The response also questions the motives, transparency and legality of the Nate Anderson-founded activist fund.
Hindenburg has been contacted for comment.
For investors in particular, Adani said the amount of borrowed money the companies are using is healthy and in line with industry benchmarks.
Adani accused the US company of being in contempt of Indian regulators and the judiciary by highlighting old allegations which Adani said had since been “judicially determined to be false”.
This included allegations that Samir Vora, the managing director of Adani Australia, was a key figure in a diamond trading scam designed to defraud the Indian government. The case was closed and dismissed, Adani said.
The high stakes came after Hindenburg dared Adani to take it to court, as it would open the coal conglomerate to further scrutiny.
Battles between large companies and short sellers can take months to play out, resulting in sustained financial pressure and slowing a company’s ability to raise money.
Greens federal industry spokeswoman Penny Allman-Payne has said the Hindenburg report should prompt Queensland’s Labor government to question whether Adani should operate in Australia.
The Adani project, located in Queensland’s coal-rich Galilee Basin, exported its first coal in late 2021, drawing widespread opposition because of the fossil fuel’s significant contribution to greenhouse gas emissions.
