CNN: The value of Gautam Adani’s business empire has crashed by more than US$ 50 billion last week since

Hindenburg Research, a US firm that makes money from short selling, published a blistering report accusing it of fraud. 

India’s Adani Group has denounced Hindenburg’s allegations as “baseless” and “malicious,” and it is considering legal action. 
But, the sharp sell-off in shares, which began Wednesday, accelerated Friday after US hedge fund billionaire Bill Ackman said he found the short seller’s report credible.

Hindenburg Research published an investigation on Adani’s conglomerate late on Tuesday, accusing it of “brazen stock manipulation and accounting fraud scheme over the course of decades.” It said it had taken a short position in Adani Group companies, meaning it would benefit from a drop in their value. 
Shares of those companies — some of which had surged over 500 percent in the last few years — plunged when India’s stock market opened Wednesday. The rout resumed Friday when trading resumed following a market holiday on Thursday. 

Shares of Adani Transmission, Adani Total Gas and Adani Green Energy — three of the group’s seven listed companies were down 20 percent each on Friday, while shares of Adani Enterprises, the conglomerate’s flagship company, fell 18 percent.  Friday’s losses wiped out almost US$ 39 billion in market value.  According to the Bloomberg Billionaires Index, Adani is still Asia’s richest man with a personal fortune worth US$ 113 billion, US$ 30 billion more than fellow Indian entrepreneur Mukesh Ambani. Friday’s losses will reduce that gap. Hindenburg said Thursday that it stood fully by its report and believed any legal action would be “meritless.”

“If Adani is serious, it should also file suit in the US where we operate. We have a long list of documents we would demand in a legal discovery process,” the short seller said in a post on Twitter. 
Hindenburg isn’t the first research firm to express concern about the finances of Adani’s sprawling empire, which has borrowed US$ 30 billion to become established in industries ranging from logistics to mining, and is aggressively growing in diverse sectors such as media, data centers, airports and cement.

Ackman weighed into the debate on Twitter Thursday, saying he found the Hindenburg investigation “highly credible and extremely well researched.” 
“We are not invested long or short in any of the Adani companies … nor have we done our own independent research,” Ackman added.

Hindenburg’s claims come at a sensitive time. Adani Enterprises is aiming to raise 200 billion rupees (US$ 2.5 billion) by issuing new shares this month. The offer will close on Tuesday.  A college dropout and a self-made industrialist, Adani is the world’s fourth richest man, ahead of Bill Gates and Warren Buffet. He is also seen as a close ally of India’s Prime Minister, Narendra Modi.
The 60-year old tycoon founded the Adani group over 30 years ago.

US$ 2.5 bn share sale on track even as bankers mull changes

REUTERS: A US$ 2.5 billion share sale by India’s Adani Enterprises remains on schedule at the planned issue price, the company told Reuters on Saturday, while sources said bankers were considering changes due to a market rout in the group’s shares. Bankers on the deal were considering extending the sale or cutting the issue price after shares of Adani plunged following a report from a U.S. short seller, three people familiar with the matter told Reuters on Saturday.

Adani Group in a statement said: “There is no change in either the schedule or the issue price.”
“All our stakeholders including bankers and investors have full faith in the FPO (Follow on Public Offer). We are extremely confident about the success of the FPO,” it said.

Seven listed companies of the conglomerate controlled by one of the world’s richest men, Gautam Adani, have lost a combined US$ 48 billion in market value since Hindenburg Research on Tuesday flagged concerns about debt levels and their use of tax havens.

The Adani Group has called the report baseless and said it was considering taking action against Hindenburg.
Sources had said that among the options the bankers were considering included extending the Tuesday subscription closing date by four days.
Friday’s 20 percent fall in shares of group flagship Adani Enterprises dragged it 11 percent below the minimum offer price of the secondary sale.

On the first day of retail bidding on Friday, the issue attracted around 1 percent of its targeted number of subscribers, raising concerns over whether it would be able to proceed. Investors, mostly retail, had bid for around 470,160 of the 45.5 million shares on offer, stock exchange data showed.
“Everyone was shocked. They did not expect such a poor response,” one source said.
The other option being considered by bankers is lowering the price, the sources said, with one saying it could be cut by as much as 10 percent.

Adani had set a floor price of 3,112 rupees (US$ 38.22) per share and a cap of 3,276 rupees - well above their close at 2,761.45 rupees on Friday. A decision was expected today, the sources said. “Revision in price band or time extension of public issue can technically be undertaken with a newspaper advertisement and issuing an addendum,” said Sumit Agrawal, managing partner at Regstreet Law Advisors and a former officer of the Indian capital markets regulator.

The sale is being managed by Jefferies, India’s SBI Capital Markets, and ICICI Securities, among others. They did not immediately respond to requests for comment.

The Hindenburg report questioned how the Adani Group used entities in offshore tax havens such as Mauritius and the Caribbean islands.
It said key listed Adani companies had “substantial debt”, which put the entire group on a “precarious financial footing”.