Adani Group Stocks Plunge, Wiping Out $47 Billion in Market Value

Shares of several companies linked to India's richest man, Gautam Adani, fell sharply on Friday, losing tens of billions of dollars in market value after allegations of fraud at his conglomerate continued to unnerve investors.

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Adani Group is down 18.52%. Five of the seven listed Adani Group companies are down.
Companies ended the day 16% to 20% lower, and the other two fell by the maximum 5% permitted by India’s exchanges for their stocks. The market’s benchmark Nifty 50 index, which includes two Adani companies, fell to a three-month low.

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Adani stocks have been on a steep decline since Hindenburg Research published a report alleging numerous malpractices at the Indian billionaire's namesake conglomerate. India's stock market was closed on Thursday for a public holiday, but the declines have continued.

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The Adani Group has accused Hindenburg Research of making baseless fraud allegations against the company, saying that the short seller is trying to smear its reputation and derail a public stock offering by one of its companies. It said the volatility in Indian stock markets created by the report has “led to unwanted anguish for Indian citizens.” The group also said it is considering legal action against the U.S. firm.

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Since Hindenburg's report was published, the seven Adani companies have lost a combined market value of around $47 billion. Earlier this week, their total market capitalization was around $217 billion, according to FactSet. Some market participants blamed Friday’s selloff partly on a tweet by U.S. hedge-fund manager Bill Ackman. Ackman is a high-profile short seller, and his tweet expressed support for Hindenburg.

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Mr. Ackman said that he found the Hindenburg report to be "highly credible and extremely well researched." He noted that he does not have a position in any Adani companies.

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A spokesperson for Adani said on Friday that the group did not have an immediate comment on the stock selloff.
Brian Freitas, founder of research firm Periscope Analytics, said that Mr. Ackman's tweet may have spooked investors who had initially taken a cautious approach to the Hindenburg report. He added that investors have also been waiting to see if the Adani Group would provide specific rebuttals to at least some of the allegations of fraud.

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According to Mr. Freitas, the conglomerate was long seen as untouchable and was able to control its own narrative for a long time, despite facing other allegations of fraud in previous years. However, Mr. Freitas believes that this is no longer the case.

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Adani Enterprises Ltd. is raising $2.5 billion through a follow-on public share sale. The sale will be open to individual investors in the country until Jan. 31.
Adani Enterprises said that it has already secured commitments from more than 30 anchor investors for the deal, including several international securities firms, the Abu Dhabi Investment Authority, Life Insurance Corp. of India, and SBI Life Insurance Co. Ltd.

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The company had set a floor price of 3,112 Indian rupees—equivalent to $38—a share for the offering. However, its shares closed around 11% below that price on Friday.
Hindenburg, a company founded by Nathan Anderson, has announced that it is betting against Adani's U.S. dollar bonds and non-Indian-traded derivatives. The bonds have seen a decrease in price in recent days, causing their yields to rise.

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Mr. Adani, 60 years old, has built a business empire with assets that include airports, renewable energy projects, coal mines, cement producers and ports. He ranks as one of the world’s richest men, thanks to the large increase in the value of his companies in recent years. Mr. Adani’s businesses have seen a significant increase in value in recent years, making him one of the richest men in the world.