Updated: Feb 3
Asia’s richest man isn’t having a fantastic beginning of the year so far as he wished he would. Indeed, the Indian business tycoon is currently in a public relations scandal which is dramatically affecting the value of the company’s stock on the public market. In 2022, Gautam Adani, the founder, and chairman of the Adani Group, an Indian national conglomerate, was among the ten richest individuals on the planet on the Forbes list. His wealth even surpassed that of Amazon’s boss Jeff Bezos and Indian industrialist, Mukesh Ambani, and subsequently became the wealthiest man in Asia. His net worth in 2022 reached nearly $125 billion.
However, the month of January had not been a great kick-off for the boss of the Adani Group since the report’s release of the Hindenburg Research. The Hindenburg Research, an investment research firm founded in 2017 with only five employees that focuses on activist short-selling, released a cutthroat report that brought the Adani Group into a public-relations turmoil. The investment firm accused the Indian multinational conglomerate of having orchestrated the largest fraud in corporate history. Since the release of this report, Gautam Adani has seen his wealth plummeting before his eyes. He lost about $36 billion in just three days, which took him off the Forbes top 10 list of the wealthiest people in the world.
The Hindenburg Research has accused Gautam Adani and his conglomerate of stock manipulation and accounting fraud. The attorneys of the Adani Group promptly issued a statement to deny the allegations. The company issued a 400-page rebuttal accusing Hindenburg of “attacking India and its institutions and of breaking securities and foreign exchange laws.” Despite the refutation of these allegations, investors are still not convinced and began to pull their investments out of Adani Group. For Hindenburg Research, this is a bold strategy that is paying off as the Adani Group is financially bleeding. The Adani Group stocks are down 21.9%, which could be considered bear-market territory for the company. The Hindenburg and hedge fund short-sellers are currently jubilating and they are amassing substantial profit from this financial and public relations bloodbath.
Realistically, a company cannot go down forever unless it completely goes out of business. The Adani Group is far from going out of business and therefore, the short-selling will not last forever. But for the time being, Hindenburg Research’s bet on sinking the Indian giant was a very risky bet that is paying off.