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A Reprint by Staff Reporters
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In the week since the Indian mogul was targeted by a short seller, his businesses have lost a combined $108 billion in value and his own net worth has plummeted by $52 billion. Adani was once the second-richest person in the world. But, as Bloomberg notes, his downfall “defies just about every historical comparison.”
CITE: https://www.r2library.com/Resource/Title/082610254
Given Adani’s sprawling business empire and his cozy relationship with India’s leadership class, this crisis has echoed across both markets and politics. Here’s a rundown of what you need to know about the most important story in global business this week.
According to Morning Brew, Adani grew up middle-class, dropped out of college to trade diamonds and eventually formed his own business hawking other physical products. During the ’90s his ambitions expanded along with the Indian economy, and he now runs a conglomerate that encompasses energy, transportation infrastructure such as ports and airports, defense manufacturing, and media.
On January 24th, a US short seller named Hindenburg Research claimed Adani’s empire pulled “the largest con in corporate history,” accusing it of stock manipulation and accounting fraud in a 100-page report. Adani has denied the allegations, but his push-back hasn’t comforted spooked investors…especially after he scrapped a $2.5 billion share sale a few days ago.
Adani responded that Hindenburg’s report wasn’t just an attack on him, it amounted to a “calculated attack on India…and the growth story and ambition of India.” Adani’s business ventures have aligned closely with the priorities of Indian Prime Minister Narendra Modi, and Modi’s political opponents are seizing on the fiasco to highlight the relationship between India’s leader and Adani.
Adani emphasized that his company’s fundamentals remain “very strong” and its balance sheet “healthy.” Still, some experts say the accusations could leave a lasting reputational stain on India’s largest corporations and hamstring their ability to grow
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Filed under: "Ask-an-Advisor", Ethics, Funding Basics, Investing, Risk Management | Tagged: Bloomberg, ENTER Guatam Adani - EXIT Guatam Adani?, Guatam Adani, Hindenburg Research, Modi, Morning Brew |
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The Adani family is not alone in being impacted by the setbacks of its conglomerate. International investors are exposed to this rout like two gray institutional investors on Wall Street. These are the Vanguard Group and BlackRock. Both firms are among the top 20 shareholders of Adani enterprises. Vanguard owns 0.75% of Adani Enterprises, according to FactSet data updated as of Feb. 3rd.
BlackRock is a shareholder of the company via two affiliates: BlackRock Fund Advisors which holds 0.57% and BlackRock Advisors (U.K.) Ltd is a shareholder with a 0.17% stake.
Kirk
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