At the start of 2023, Gautam Adani was considered the third wealthiest businessman in the world and the richest in Asia. His conglomerate, present in a diversity of sectors such as agriculture, construction, chemicals or financial services, viewed the new year with optimism, just a few months before they had reached the figure of 100,000 employees around the world.
Adani Group was the model of India’s economic developmentcountry of origin of the entrepreneur, in recent decades: to the extent that the nation is considered to be in the top ten of global economies measured by GDP, and that the demographic dividend would place it in the top five at some point in the next decade, when it will also surpass China as the most populous nation on the planet.
But the Adani Group empire has collapsed like a house of cards in just three days; at the close of February 1, the conglomerate already registered an accumulated loss of value of 92 billion dollars, a financial disaster that threatens to collapse and ruin this business group. For some specialists we could be observing the Indian Lehman Brothers, but in fast motion.
The Hinderburg report, the beginning of the end?
Hinderburg Research is an American financial research and analysis firm founded just 6 years ago, in 2017, by Nathan Anderson, now 38 years old. This signature plays a central role in the collapse that Adani is experiencing; The so-called “Hindeburg report” has put the Indian conglomerate on the ropes, while leading its owner Gautam Adani to occupy first the eighth place on the Bloomberg billionaires list, from the third in which he was at the beginning of 2023, but yesterday, Wednesday, before the collapse of the capitalization value of Adani Group, it was already placed in tenth place.
In addition, Gautam Adani, is no longer the wealthiest businessman in Asia, now his place is occupied by the Indian businessman Mukesh Ambani; The blow of the “Hinderburg Report” for Adani is of such magnitude that in just 3 days his capital gains from last year evaporated, for an approximate sum of 44 billion dollars, according to the most recent Bloomberg report.
But what does the “Hinderburg Report” say? In summary, this document released by the analysis firm accuses that after two years of closely following the figures of the conglomerate and collecting evidence, detected that Gautam Adani’s corporate has shamelessly manipulated its share prices for years and therefore has committed accounting fraud for decades.
For the authors of the report (Hinderburg Research is a company with just six employees), the Adani Group acts like a family business, in addition to the fact that they have already faced accusations for money laundering worth 17 billion dollars.
Among an accumulation of evidence and figures, the “Hinderburg Report” concludes that the prices of the shares of the Adani Group companies are trading, at least, 85% above their real value. These accusations have plummeted the capitalization value of Adani Group in the stock marketsand threatens to bankrupt it, becoming the great corporate scandal of the beginning of the year.
Although Hinderburg Research is a small company with just six employees, including its president and CEO, it already has another precedent when in September 2020, in the midst of a pandemic, it accused the electric vehicle manufacturer Nikola of corporate malpractices, after selling more of 34,000 million dollars in actions. Nikola’s stock collapsed and its CEO and founder had to resign when the judge accepted Hinderburg’s fraud charge.
Plummet, an attack on the Indian economy?
Gautam Adani has tried to counterattack and, in addition to publishing a series of financial reports related to his conglomerate, points out that the actions against his business group are an attack on the economy of his country due to the accelerated rate of growth and well-being that it has registered over the decades. recent.
But it has been of little use. The Bloomberg agency points out that the confidence crisis hitting Gautam Adani is already translating into a record 28 percent drop in shares of its flagship company, equivalent to 92 billion dollars, as of Sunday when in Bombay, India, the details of the “Hinderburg Report” were known.
In this scenario of loss of confidence, Credit Suisse said that it stopped accepting bonds from Adani Group firms as collateral for margin loans to its private banking clients, another proof of the crisis that the businessman is experiencing.
Now the risk is that as more financial institutions begin to assess their exposure to the indebted conglomerate, investors who recently bought shares in Adani Enterprises could face huge losses.
Why does it matter in the world?
The crisis in the Adani Group, a company unknown in many parts of the world despite the fact that its owner became the third richest man in the world, has to do with an essential factor for the confidence of investments in the entire planet, including for of course Mexico.
At stake is trust in corporate governance in the world; that is to say,with what confidence do investors allocate resources of all kinds to conglomerates or business corporations?, How certain can they be that the stock prices are not manipulated?
In the past three years, Adani Group shares have accumulated a 1,500 percent rally; some specialists today say that an adjustment was inevitable, what they never considered was the forcefulness of the “Hinderburg Report” that threatens to bankrupt this company, and the crisis of confidence may spread because now the question in the financial circuits is: whathow many more corporations will have bad practices?