India’s Adani Group has issued an angry rebuttal to allegations of wrongdoing by short seller Hindenburg Research which wiped more than $50 billion of its value last week, in a bid to calm investors amid a $2.4 billion stock sale.
In the document, which is 54 pages plus some 350 other annexes, the industrial conglomerate owned by billionaire Gautam Adani said Hindenburg’s report had “caused a severe and unprecedented negative impact on our investors”.
The allegations were “not simply an unwarranted attack on any particular company, but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the history of growth and l India’s ambition,” he said.
New York-based Hindenburg released the findings of a two-year investigation last week in which he alleged Adani had engaged in “brazen inventory manipulation and accounting fraud” for decades.
By the end of Friday’s session, the report had erased about 20%, or more than $50 billion, of the value of Adani Group’s listed companies. Shares of Indian banks and insurers exposed to the activity also fell.
Adani Enterprises, one of the group’s companies, said over the weekend that its follow-on public offering of shares would go ahead as planned, despite fears it would struggle to attract investors.
The offer was aimed at expanding the shareholder register of the sprawling industrial group, much of which is currently held by related entities and funds based in Mauritius.
Adani Enterprises’ share price closed at 2,761.45 rupees on Friday, well below the 3,112-3,276 rupee range set for the sell.
The offering was launched on Friday and the books are expected to close on Tuesday.
“There is no change in either the timing or the issue price,” Adani said on Saturday. “All of our stakeholders, including bankers and investors, have full confidence in the [offering]. We are extremely confident about the success of the [offering].”
The short seller’s challenge to the group has sent a chill through the Indian business community: the company has a wide range of interests, including oil and gas, ports, airports and mining.
It is one of India’s largest private infrastructure groups and before the sale, Gautam Adani was the third richest person in the world.
Adani’s rebuttal said “not one of ‘the 88 questions posed by Hindenburg’ is based on independent or journalistic investigation. They are merely selective regurgitations of public revelations or rhetorical innuendos coloring rumors as fact” .
He dismissed many questions as “refuted” and “baseless allegations” or “misleading claims”, while others received longer answers, including scanned documents, charts and quotes.
The group dismissed questions about its debt-fueled growth model, saying that Adani portfolio companies’ “leverage ratios continue to be healthy and are in line with industry benchmarks for the respective sectors.”
He previously said he was considering legal action against Hindenburg, whose past targets have included electric vehicle company Nikola and social media site Twitter.
Hindenburg said last week he would “welcome” legal action. “If Adani is serious, he should also file a complaint in the United States, where we operate,” the short seller said. “We have a long list of documents that we would require in a forensic discovery process.”