Bill Ackman Backs Hindenburg's Adani Report

Bill Ackman of Pershing Square has found the Hindenburg Research report on Adani Group companies to be "highly credible and extremely well researched," he said in a Twitter post.

This comes less than two days after the American short seller's swipe at the Indian conglomerate, which shaved $12 billion off its market value.

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"Adani's response to Hindenburg Research is very similar to Herbalife's response to our original 350-page presentation," Ackman said. He was referring to his short-selling campaign against the weight-loss shakes seller, which lasted more than five years before he exited his position in Herbalife Nutrition Ltd. in 2018. A representative for the Adani Group did not immediately respond to an emailed request for comment on the Ackman Twitter post. In a separate Twitter post, Ackman said that he is neither "long or short" in Adani firms nor has done any independent research.

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Adani Group said Thursday that it was exploring legal action against Hindenburg Research. The ports-to-power conglomerate also called the Jan. 24 report "maliciously mischievous," "bogus" and "unresearched."

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Hindenburg Research, a financial research firm, published a report this week accusing the Adani conglomerate of market manipulation and accounting fraud. The report recommended shorting the company's US-traded bonds and non-Indian-traded derivative instruments. The allegations of corporate malpractice against Adani speak of a web of offshore shell entities controlled by the Adani family in tax havens like the Caribbean, Mauritius and the United Arab Emirates.

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Hindenburg alleges that these were used to enable corruption, money laundering and taxpayer theft, while diverting money from the group's publicly traded companies. The conglomerate's businesses include ports, power plants, airports, data centers, renewable energy, cement manufacturing and media.

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Adani's listed companies saw their stock prices continue to fall on Friday, following a short seller attack on Wednesday. The attack came on a sensitive day for Adani, as its flagship company, Adani Enterprises Ltd., was in the midst of a $2.5 billion share sale for institutional investors. Despite the attack, the sale was oversubscribed.
The sale, which is still open for subscription until Jan. 31, is part of the tycoon’s attempt to gain global credibility for his rapidly-growing empire. Adani is also trying to attract India’s small investors to broaden his shareholder base. This would help silence critics who point to his group’s thinly-traded stocks and rising debt.

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The recent short seller attack on the Adani conglomerate highlights the risks of going global for self-made billionaires like Adani. As Adani and his aides become more visible on the international stage, they are held to increasingly high standards of corporate governance. Adani has largely managed to avoid scrutiny in his home country, where he has mostly faced criticisms over high levels of leverage and political barbs for his perceived proximity to the Indian Prime Minister Narendra Modi.

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Adani's past challenges have not stopped his meteoric rise. However, Hindenburg may be his toughest opponent yet. Hindenburg is a small short seller, but one with a history of taking down companies like electric vehicle maker Nikola Corp.

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The research firm said in a Twitter post on Wednesday that it was standing by its report and welcomed the company's threats of legal action. The firm said that if Adani is serious, it should also file suit in the US where the firm operates. The firm said it has a long list of documents it would demand in the legal process.