Indian billionaire Gautam Adani on Wednesday scrapped a deal to raise $2.5 billion from investors after a week of plummeting value at his logistics and energy business empire that began when a American short seller accused the conglomerate of fraud.
The share sale – the largest offering by a company already listed on the Indian stock exchange – had successfully closed just 24 hours earlier. Its flagship company, Adani Enterprises, had found enough willing backers despite days of turmoil in the market after the publication of a scathing analysis by Hindenburg Research.
But a brutal day of trading on Wednesday erased billions more of the value of his companies, including Adani Enterprises. The conglomerate has seen its value drop by around $90 billion since the publication of the Hindenburg report. So Adani backtracked, announcing his decision in a stock market filing after 10 p.m. local time.
“Today’s market was unprecedented and our stock price fluctuated throughout the day,” Adani said in a statement. “Given these extraordinary circumstances, the Company’s Board of Directors has determined that the continuation of the [share] question will not be morally correct,” he added.
Adani Enterprises, whose stock tumbled nearly 30% on Wednesday, said it was working with its bankers to repay investors who had pledged to buy the new shares.
The U-turn is a huge setback for one of India’s most prominent industrialists. Just a week ago, his sprawling group was worth an estimated $200 billion, making him the richest man in Asia by far. At one point last year, he even overtook Jeff Bezos to become the world’s second-biggest billionaire.
But on Wednesday, Adani’s net worth – $72.1 billion – made him the second richest man in Asia, according to Bloomberg’s Billionaire’s Index. The index indicates that Mukesh Ambani, with a fortune of 81 billion dollars, is the richest man in Asia.
Adani is one of India’s largest coal producers and operates the controversial Carmichael Coal Mine in Australia. It has also invested billions of dollars in clean energy, an ambition that aligns with India’s long-term climate goals, and has recently expanded into media, data centers, the production of cement and airports.
The 60-year-old college dropout is seen as a close ally of Indian Prime Minister Narendra Modi, and investors have bet on his ability to grow his businesses in sectors the government has prioritized for development. Shares of some of his companies have soared 1,000% in recent years.
Adani had largely managed to ignore previous suggestions that his group had grown too large by taking on too much debt during a period of rapid growth.
Then the Hindenburg report landed.
The research firm accused the Adani group of companies of “brazen stock manipulation and accounting fraud over decades”. He said he took a short position in some of Adani’s US-listed securities, meaning he would benefit from a drop in their value.
Adani immediately denounced the report as “baseless” and “malicious”, and said he was considering legal action.
In its statement Wednesday evening, the Indian industrialist said that the decision to reimburse investors for the money they had just committed would have no impact on the group’s existing activities or on its future plans.
“Our balance sheet is very healthy with strong cash flow and secure assets, and we have an impeccable track record of servicing our debt,” he said. “We are very confident that we will continue to get your support. Thank you for the trust you place in us.
Diksha Madhok contributed to this article.