2023 Proved To Be The Costliest Year For Gautam Adani, Wiped $35 Billion Off His Wallet
The Adani-Hindenburg controversy emerged as a focal point in 2023, triggering a legal and regulatory maelstrom. It not only put Gautam Adani, Adani Group, in the spotlight for all the wrong reasons but also wiped off a substantial amount from his kitty. By the end of the September quarter, the Adani group's total net debt decreased to Rs 180,371 crore, with its net debt to trailing-12-month EBITDA standing at 2.5x, the lowest in the past decade.
In 2023, Gautam Adani, the billionaire who has faced challenges such as the 2008 terror attack in Mumbai’s Taj Hotel and a kidnapping incident in 1998, concluded the year with a staggering loss of approximately $35 billion attributed to the Hindenburg attack.
Amidst the Hindenburg controversy and the subsequent Securities and Exchange Board of India (Sebi) investigation into allegations of share price manipulation, the 61-year-old tycoon experienced the most significant decline in personal wealth globally, according to data from the Bloomberg Billionaires Index.
Before the Hindenburg incident, Adani’s wealth exhibited an upward trajectory, briefly securing him the title of the world’s second-richest individual with an estimated fortune of around $85 billion. However, he now holds the position of the second richest Indian, trailing behind Mukesh Ambani.
Within the hierarchy of billionaires, Adani, a school dropout turned magnate, currently occupies the 15th spot after enduring a loss of over 29% of his wealth during the conglomerate’s worst crisis in its history.
The combined market capitalization of all 10 listed Adani stocks has plummeted from over Rs 19 lakh crore to about Rs 14 lakh crore following the release of the Hindenburg report.
At one juncture in the year, nearly 60% of Adani’s wealth vanished due to continuous selling of Adani stocks.
However, relief came on March 2 when US-based GQG Partners invested Rs 5,460 crore in four Adani stocks, marking the beginning of a positive trend. Since then, the fund house, led by NRI Rajiv Jain, has consistently increased its stakes in Adani stocks.
To address concerns raised by the Hindenburg report and historical investor apprehensions, the Ahmedabad-based conglomerate proactively raised cash to manage debt.
By the end of the September quarter, the Adani group’s total net debt decreased to Rs 180,371 crore, with its net debt to trailing-12-month EBITDA standing at 2.5x, the lowest in the past decade.
The Upward Tick
Recent weeks have witnessed a resurgence in Adani stocks, propelled by the Bharatiya Janata Party’s victories in state assembly elections and renewed investor confidence following the US government’s determination that Hindenburg’s allegations of corporate fraud were not relevant.
This confidence boost led to a substantial extension of financial support—up to $553 million—for a container terminal in Sri Lanka.
Recently, the Supreme Court, in response to a series of pleas related to the Adani-Hindenburg controversy concerning allegations of stock price manipulation, announced that it has reserved its order.
The court expressed hesitancy in accepting information from the media as an unquestionable truth, stating that it cannot treat the content of the Hindenburg report as automatically accurate.
The bench, led by Chief Justice D Y Chandrachud, emphasized that the Securities and Exchange Board of India (SEBI) was directed to investigate the matter to ensure fairness.
The SEBI investigation revealed that certain entities took short positions before the Hindenburg report’s publication and profited by squaring off their positions after the subsequent crash in stock prices.
From January 24 to February 27, the market capitalization of Adani stocks experienced a substantial decline of approximately Rs 12.4 lakh crore, further decreasing to Rs 10 lakh crore by March 9.
Following public interest litigations (PILs) prompted by the Hindenburg report, the Supreme Court established a six-member panel led by former Supreme Court judge Justice AM Sapre.
The panel submitted a report in May, stating that, based on the explanations provided by SEBI and supported by empirical data, it couldn’t definitively conclude whether there was any regulatory failure on SEBI’s part.
Gautam Adani, the beleaguered billionaire, denounced the Hindenburg report as a concoction of targeted misinformation and outdated, discredited allegations aimed at tarnishing the group’s reputation and manipulating stock prices for profit.
Adani highlighted the adverse consequences of the short-selling incident and emphasized that, despite issuing a comprehensive rebuttal promptly, various vested interests sought to exploit the claims made by the short seller.
On January 24, Hindenburg, in a detailed 106-page report, characterized Adani’s ascent to wealth as the “largest con in corporate history.” The report made serious accusations regarding stock manipulation and accounting fraud schemes by the self-made billionaire spanning decades.
Today, Gautam Adani stands at 16th position on the global billionaires list with a total wealth of $72.2 billion.
The Last Bit: As the legal proceedings of the Adani-Hindenburg controversy continue, the Supreme Court’s cautious approach underlines the complexity of addressing allegations based on media reports.
At the same time, the SEBI investigation’s findings of short positions and subsequent profits add another dimension to financial manoeuvres.
Despite the six-member panel’s report expressing uncertainty about regulatory failure, the aftermath of the Hindenburg report continues to cast a shadow on the Adani Group.
Gautam Adani’s steadfast denial and characterization of the report as a deliberate effort to tarnish the group’s reputation reveal the high stakes involved.
As the legal proceedings unfold, the impact on market confidence and regulatory scrutiny remains pivotal, shaping the narrative of one of the most significant financial controversies in recent times. Still, it seems that Gautam Adani of Adani Group remains unfazed.
