Most of Adani Group’s companies extended a $51 billion stock selloff, an indication that the billionaire’s rebuttal of fraud allegations from American short seller Hindenburg Research is largely failing to convince investors. The dollar bonds also fell.
Adani Green Energy Ltd., Adani Total Gas Ltd. and Adani Transmission Ltd. each fell by more than 10% as trading started in Mumbai, while Gautam Adani’s flagship firm Adani Enterprises Ltd. defied the trend by rising 6.3%.
The latest turmoil comes as Adani Enterprises seeks to complete a $2.5 billion share sale, with Hindenburg saying the 413-page refutation fails to answer most of its questions. The saga also threatens to weaken broader confidence in India, until recently a top investment destination for Wall Street, and accelerate a nascent shift toward a reopening China.
“It certainly is no great advertisement for India and risks damaging short-term sentiment,” said abrdn plc’s Asia Chairman Hugh Young. “We don’t invest in Adani, so the concern is a broader one.”
In its rebuttal published Sunday, Adani said that some 65 of the 88 questions have been addressed in the conglomerate’s public disclosures, describing the short seller’s conduct as “nothing short of a calculated securities fraud under applicable law.” It reiterated it will “exercise our rights to pursue remedies to safeguard our stakeholders before all appropriate authorities.”
The lengthy response comes in the last leg of a share offer by Adani Enterprises, which received overall subscriptions of 1% for the institutional and retail portion on Friday. While investors in Indian public offerings typically wait until the last day of the sale to place bids, there were concerns that Hindenburg’s attack on the country’s richest man would sour sentiment.
In the latest twist, Hindenburg said Monday that Adani’s rebuttal has failed to specifically answer 62 of 88 questions posed by the short-seller. “Of the questions it did answer, the group largely confirmed or attempted to sidestep our findings,” it said in a statement.
“Not sure if Adani’s rebuttal is enough to assuage investor concerns “just because things are disclosed and known does not make them right,” said Brian Freitas, an equities analyst who publishes on the platform Smartkarma. “How does a group that big explain no analyst coverage and no mutual fund holdings?”