Adani Enterprises, the leading company of the conglomerate, encountered an initial decline of approximately 9 per cent during early trade, although it managed to recover some of its losses by noon. Most other stocks within the Adani Group also experienced setbacks, with losses ranging from 2 to 6 percent.
While the request for information from US prosecutors does not necessarily indicate the initiation of criminal or civil proceedings, the interest shown by US authorities raises concerns for the Adani Group, which had made a strong recovery following the release of Hindenburg Research’s report.
The group is accused of engaging in long-standing stock manipulation and accounting fraud, allegations that the Adani Group firmly denies. Despite the denial, the conglomerate faced a significant decline in the share prices of its listed companies, resulting in a loss of over $150 billion in market capitalization. Although there has been some recovery, the combined market capitalization remains nearly $100 billion lower than before.
Hindenburg Research’s report, released on January 24, accused the Adani Group of utilizing a network of offshore companies in tax havens to manipulate share prices and financial results. The report also alleged violations of disclosure and shareholding laws. In response, the Adani Group refuted the allegations, referring to the short-seller’s report as “nothing short of a calculated securities fraud.”
A spokesperson for the Adani Group expressed confidence in the completeness and adequacy of the disclosures made in the relevant issuer offering circulars and also stated that the conglomerate was unaware of any subpoenas issued.
The aftermath of the report dealt a severe blow to the Adani Group and its ten publicly listed companies. Several major investors divested their stakes, while others reduced their holdings within the group. However, following a significant period of decline, the Adani Group received support from US boutique firm GQG Partners, which acquired stakes worth Rs 15,000 crore in five Adani Group companies.
Rajiv Jain, co-founder and chairman of GQG Partners, expressed optimism about the conglomerate’s infrastructure assets and confirmed the firm’s intention to participate in the group’s future fundraising endeavors. Jain further emphasized GQG’s aspiration to become a prominent investor in the Adani Group within five years, second only to the family’s stake.
