Indian Conglomerate Adani Group Faces Stock Plunge Amid U.S. Regulatory Probe Triggered by Hindenburg Report
In a significant blow to the Adani Group, the shares of its affiliated companies experienced a sharp decline on Friday. This downward spiral came as a result of a report indicating that the conglomerate is under regulatory scrutiny in the United States due to its handling of a previous short seller report earlier this year.
Leading the decline was Adani Enterprises Ltd (NS:ADEL), the flagship firm within the Adani Group, which witnessed a substantial drop of nearly 9%. Adani Ports and Special Economic Zone Ltd (NS:APSE) also suffered a loss of 4.9%, while Adani Power Ltd (NS:ADAN) and Adani Transmission Ltd (NS:ADAI) experienced respective declines of 5.1% and 7.9%.
According to Bloomberg, the U.S. Attorney’s Office in Brooklyn, New York, has initiated inquiries with major U.S. stakeholders of Adani regarding the conglomerate’s response to allegations made by Hindenburg Research in their short seller report released in January.
The report from the short seller not only triggered this U.S. regulatory investigation but also prompted the U.S. Securities and Exchange Commission to launch a separate probe into Adani’s representations to American shareholders.
Adding to the growing concerns, Deloitte, a prominent auditor, recently expressed unease over suspicious transactions conducted by Adani Ports. Deloitte’s concerns bear some connection to the allegations raised by Hindenburg.
The news of these developments reignited apprehensions surrounding the allegations made in the Hindenburg report. Among its claims were accusations of Adani’s involvement in the improper utilization of offshore tax havens and manipulation of stock prices.
Hindenburg revealed that it had taken a short position in the conglomerate through bonds and exchange-traded funds, also highlighting concerns regarding Adani’s remarkably high levels of debt.
As a result of the report, Adani suffered a staggering $100 billion decline in value, although the conglomerate has since made a substantial recovery, recouping a significant portion of the losses.
Meanwhile, an investigation conducted by the Securities and Exchange Board of India yielded no significant findings in May. The probe, slated to conclude by mid-August, has seemingly reached a dead end, as indicated by a panel appointed by the Supreme Court, deeming it a “journey without a destination.”
The repercussions of Adani’s losses reverberated throughout the broader Indian markets on Friday, with the Nifty 50 index experiencing a decline of 0.4%.