Gautam Adani is the richest person in Asia, with a fortune that exceeds that of Bill Gates, Jeff Bezos or Mark Zuckerberg. His conglomerate of companies employs more than 100,000 people around the world, covering not only coal mining, but also businesses as diverse as agriculture, construction, chemicals or financial services. It seemed that Adani Group was going to face 2023 with strength after the good results of last year, but in a matter of days much of his fortune has vanished.
In just three days, the shares of Adani’s various companies have fallen on the stock market by more than 20%. A fall that already accumulates losses worth more than 70,000 million dollars. All due to the investigation of a young financier, who has accused the Indian empire of creating “the biggest scam in the history of the corporate world”.
Hinderburg Research has been the research firm that has launched the accusation. After more than two years of collecting evidence, they found that Adani’s conglomerate brazenly manipulated his actions and has been committing accounting fraud for decades.
The report points out that Adani Group acts as a family business and they have already been accused of money laundering worth some 17,000 million dollars. It is extensive work, but among the accusations they conclude that at least their shares are 85% above their real value.
Adani’s response was immediate, arguing as expected that they comply with all relevant laws and opening the possibility of legal action against Hinderburg Research. An answer that the research firm already expected and answer that his 106-page report and more than 720 sources is ready to go to trial.
It’s the start of a battle between two contenders who couldn’t be more disparate. While Adani Group is a conglomerate with multi-billion dollar profits, Hinderburg Research is a humble firm with just five employees. Fortunately for them, they are well aware of what they are doing.
david vs goliath
Nathan Anderson, 38, is the head of Hinderburg Research. Five years ago, this New York financier with a degree from the University of Connecticut was virtually unknown in the industry. He worked at the company FactSet Research Systems Inc where he investigated the investments of large companies.
In an interview with the Wall Street Journal, Anderson explains that he became aware of this type of practice and it was when in 2017 he founded his own financial analysis firm. His accusation against Adani was not the first recognized case. In September 2020, Hinderburg scored his first success with the prosecution of the manufacturer of electric vehicles. Nikola. After being worth more than $34 billion, Nikola collapsed and its CEO and founder had to resign when the judge upheld Hinderburg’s fraud charge.
Following the conclusions of his report against the Adani Group, Hinderburg has taken short positions. Which means that they benefit from the decline in shares. They do so because they trust the veracity of these accusations of fraud, manipulation and money laundering.
The collapse of Adani Group shares is a major setback for the billionaire. Over the past three years, its shares had skyrocketed 1,500%, allowing him to become the third richest person in the world, according to Forbes. With the latest moves, she has fallen back to eighth place. A position that, depending on how this legal battle develops, can change again precipitously.
In Xataka | Two companies control the money of the whole world. You’ve probably never heard of them.