Adani hits back at Hindenburg, says it made all disclosures

  • Adani issues 413-page rebuttal to Hindenburg Report
  • Adani shares fall on US short-seller report
  • Adani says it complies with laws, makes required disclosures
  • Adani CFO confident $2.5 billion share sale will be successful

NEW DELHI, Jan 30 (Reuters) – India’s Adani Group issued a detailed riposte on Sunday to a Hindenburg Research report that raised $48 billion in its shares, saying it complied with all local laws and have made required regulatory disclosures.

The group led by Indian billionaire Gautam Adani, Asia’s richest man, said last week’s Hindenburg report was aimed at enabling US-based short sellers to book profits without citing evidence.

For 60-year-old Adani, the stock market slump has been a dramatic blow for a school-dropout who rose rapidly in recent years to become the world’s third-richest man, slipping to seventh on the Forbes rich list last week. before.

Adani Group’s response comes as its flagship company, Adani Enterprises (ADEL.NS) went ahead with a $2.5 billion share sale. This is overshadowed by the Hindenburg Report, which flagged concerns about debt levels and the use of tax havens.

“All transactions entered into by us with entities that qualify as ‘related parties’ under Indian laws and accounting standards have been duly disclosed,” Adani said in a 413-page reply released late on Sunday night.

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It states, “It is rife with conflicts of interest and merely a false market-making attempt in securities to enable Hindenburg, an approved short seller, to unfairly book massive financial gains at the expense of countless investors.” is intended.”

Hindenburg did not immediately respond to a request for comment on Adani’s response on Sunday.

Its report questioned how the Adani group used offshore entities in tax havens such as Mauritius and the Caribbean islands, adding that some offshore funds and shell companies “secretly” held their stock in Adani’s listed firms. Keeps

Adani said the research report made “misleading claims about offshore entities” without any evidence.

Adani said on Thursday it was considering taking action against Hindenburg, who responded the same day by saying he would welcome such a move.

The Hindenburg report also noted that five of Adani’s seven major listed companies reported current ratios, a measure of liquid assets minus near-term liabilities, that are below 1, which is ” suggests an increase in short-term liquidity risk”.

It added that major listed Adani companies had “substantial debt”, which has put the entire group on a “precarious financial position” and that shares of seven Adani listed companies have fallen by 85%, which has been described as “sky-high”. called “Valuation”.

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Adani’s response said that over the past decade, its group companies have “consistently de-lever”.

Defending its practice of pledging shares of its promoters – or major shareholders – the Adani group said raising finance against shares as collateral was a common practice globally and based on thorough credit analysis by large institutions and banks. Loan is given on.

The group said India has a robust disclosure regime and its promoter pledging position in portfolio companies had fallen from over 50% in some listed stocks in March 2020 to less than 20% in December 2022.

‘sail through’

The Hindenburg Report and its fallout are seen as one of the biggest career challenges to face the billionaire, whose business interests range from ports, airports, mining and power to media and cement.

Adani’s response consisted of more than 350 pages of annexures including annual reports, public disclosures and excerpts from earlier court decisions.

Adani said Hindenburg sought answers to 88 questions in its report, but 65 of them pertained to matters disclosed by Adani portfolio companies in annual reports.

The rest, Adani said, pertained to public shareholders and third parties, and some were “baseless allegations based on fanciful fact patterns”.

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Hindenburg, best known for short electric truck maker Nikola Corp (NKLA.O) and Twitter, said it holds short positions in Adani companies through US-traded bonds and non-Indian-traded derivative instruments.

Adani also responded to Hindenburg’s allegations regarding the company’s auditors, saying, “All these auditors that have been appointed by us are duly certified and qualified by the relevant statutory bodies.”

Its response comes just hours before India’s market opens, when a $2.5 billion secondary share sale begins on the second day of subscription. Friday’s fall took shares of Adani Enterprises below the issue price, raising doubts over its success.

In a separate statement on Sunday, Adani Group Chief Financial Officer Jugeshinder Singh said it is focused on the share sale and is confident it will be successful. He also said that its anchor investors have shown faith and remain invested.

“We are confident that the FPO (follow-on public offering) will also be successful,” he added.

Reporting by Aditya Kalra, Aditi Shah, Jayashree Upadhyay and Anirudh Saligram in Bengaluru; Editing by Kevin Liffey and Alexander Smith

Our Standards: The Thomson Reuters Trust Principles.

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