India’s Adani Group made headlines last month after it was accused by US-based short-seller Hindenburg Research of stock manipulation, unsustainable debt and use of tax havens.
The ports-to-energy conglomerate, which operates seven publicly traded companies, had a combined valuation of $220 billion. Because of the accusations, Adani’s shares have been in free fall, with the conglomerate’s cumulative market value loss reaching a whopping $133 billion. The Adani Group has denied the allegations, calling them “malicious” and “baseless” and says it plans have not changed. But investors are clearly still nervous.
Here are five facts you need to know about the ongoing scandal:
- After Hindenburg Research accused the group of “brazen” stock manipulation and accounting fraud, its valuations have nearly halved. The group’s founder Gautam Adani has seen billions wiped off his personal wealth and has dropped to the 17th spot on the list of the world’s top 20 richest people.
- Analysts are watching to see if there will be a regulatory inquiry into the group’s corporate governance. The issue has also set off a political row over Adani’s perceived closeness to Prime Minister Narendra Modi, which both deny.
- TotalEnergies has put a hold on a multi-billion dollar contract to extend its partnership with Adani for the production of green hydrogen, the French oil major said on Wednesday.
- The embattled group was also forced to call off its flagship Adani Enterprises’ $2.45 billion FPO due to the market rout.
- Global rating agencies have mixed views on the Adani situation and the direct ramifications for the Adani Group. Fitch Ratings said there was no immediate impact of the crisis on its ratings of the group’s entities and its securities. Moody’s, meanwhile, warned that “these adverse developments are likely to reduce the group’s ability to raise capital to fund committed capex or refinance maturing debt over the next one to two years”.