A Short Seller Costs an Indian Giant Billions

Investors appear unconvinced by Adani’s defense

The Adani Group, one of India’s most powerful and prominent industrial conglomerates, is continuing to reel from accusations by a short seller that it had perpetrated stock manipulation and fraud in “the largest con in corporate history.”

The criticism has wiped about $70 billion of market value off Adani’s various listed companies (and whacked the net worth of the group’s founder, Gautam Adani). It has also stoked concerns about the conglomerate’s efforts to raise money, including through a huge stock offering.

The Adani Group has gone on offense, issuing a 413-page rebuttal to the fraud accusations by Hindenburg Research, a small New York-based firm run by Nathan Anderson. The Adani Group called Hindenburg’s report baseless and said the investment firm’s shorting of Adani-related companies’ overseas-traded bonds and derivatives was securities fraud. For good measure, the company said Hindenburg’s conduct amounted to a “calculated attack on India.”

Hindenburg, which made a name for itself taking on S.P.A.C.s and crypto firms, said it stands by its report, adding “fraud cannot be obfuscated by nationalism.”

Investors seem to be siding with Hindenburg, for now. Shares of several listed Adani companies, including Adani Total Gas and Adani Green Energy, were down 20 percent this morning, though its flagship Adani Enterprises was up 5 percent.

A bigger concern is that the Adani Group is falling short of its goal of raising $2.5 billion through a stock offering: Investors have bid on just a fraction of the 45.5 million shares on offer, according to stock exchange data. “The issue is not even at the halfway mark, and tomorrow is the closing date,” Saurabh Jain, an equity analyst with SMC Global Securities in Delhi, told DealBook. “This will be a big 24 hours.”