NEW DELHI, India — Beleaguered Indian billionaire Gautam Adani called off the $2.5 billion sale of shares of his flagship company Wednesday night after a tumultuous week in which his conglomerate lost tens of billions of dollars in value. following allegations of fraud by a US-based short selling company.
Citing a volatile market and unprecedented situation, Adani Group said in a statement that it decided not to proceed with the sale of its shares, which were pre-sold on Tuesday, and will return the proceeds from the offering.
The firm announced the move a day after Adani visited the recently purchased Haifa port, pledging to continue investing in Israel despite its dire financial problems.
Shares related to Adani have plunged in recent days after Hindenburg Research, a financial research firm with a history of driving share prices below its targets, accused the group of “blatant” stock market manipulation. and accounting fraud, among other financial abuses.
By the time they closed for business on Wednesday, Adani Enterprises was down 28 percent. The sell-off was a sharp turnaround from the previous day, when the sale of its shares drew nearly 51 million offers, topping the 45.5 million that were offered to the public.
Shares in six of Adani’s other publicly traded companies also sank between 2% and 19%. Adani Ports and Special Economic Zone, which bought the Haifa port along with local partner Gadot Group for about $1.2 billion, fell nearly 18%.
View of the port of Haifa on July 31, 2022. (Shir Torem/Flash90)
“The market has been unprecedented and our share price has fluctuated throughout the day. Given these extraordinary circumstances, the Company’s board of directors considered that moving forward with the matter would not be morally correct,” Adani said in his first remarks since the controversy.
He added that the group acted to protect its investors and insulate them from any financial loss.
The share sale and its success were seen as a crucial test of investor confidence in Adani. Wednesday’s stock losses cost Adani his title as the richest man in Asia and India, as his fortune plummeted to $72 billion, according to Bloomberg. Prior to the Hindenburg report, his net worth of around $120 billion made him the third-richest man in the world.
Hindenburg, who said he was betting against the Adani Group, accused him of “pulling the biggest scam in corporate history.” He said he judged the seven key Adani-listed companies to be “85% underperforming, purely on a fundamental basis due to sky-high valuations.”
The firm said its report followed a two-year investigation. Most of the allegations involved concerns about the group’s debt levels, the activities of top executives, the use of offshore shell companies to artificially increase share prices, and previous fraud investigations. He listed 88 questions for the group to answer.
On Sunday, the Adani Group dismissed Hindenburg’s allegations and issued a 413-page report rejecting his questions, saying none were “based on independent factual or journalistic investigation.” Adani’s response included documents and data tables and said the group made all necessary regulatory disclosures and complied with local laws.
Hindenburg responded by saying that Adani had answered only 26 of his 88 questions and did not address many of the issues he raised.
A motorist drives past the Adani Corporate House in Ahmedabad, India, Friday, Jan. 27, 2023. (AP/Ajit Solanki)
In his statement on Wednesday, Adani said the decision to scrap the share offer “would not have any impact on our existing operations and future plans”, adding that the group’s balance sheet was “very healthy” with strong cash flows and assets. insurance. “Once the market stabilizes, we will review our capital markets strategy,” he said.
Adani made a fortune mining coal as energy-hungry India grew rapidly after its economy liberalized in the 1990s. The market value of his companies has skyrocketed in recent years. Adani’s companies operate airports in major cities, build roads, generate electricity, make defense equipment, develop agricultural drones, sell cooking oil and run a media outlet.
Appearing alongside Netanyahu on Tuesday, Adani said his group would renovate the port and boost Haifa’s economy, while literally remaking the city.
“I promise you that in the coming years we will transform the horizon that we see around us,” said Adani. “The Haifa of tomorrow will look very different from the Haifa you see today. … Our intention is to make the right set of investments that will not only make Adani Gadot’s association proud, but make all of Israel proud.”
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