Adani Shares Drop Amid New Hindenburg Allegations

Shares of the Adani Group, a major Indian conglomerate owned by billionaire Gautam Adani, experienced a significant decline on Monday following allegations from U.S. short-seller Hindenburg Research. The latest report accused the head of India’s market regulator, Madhabi Puri Buch, of a conflict of interest, claiming this prevented a thorough investigation into Hindenburg’s previous accusations of fraud and stock manipulation against the Adani Group.

The stock market reaction was swift, with shares of Adani Enterprises, the conglomerate’s flagship company, dropping more than 5% to $35.9 (Rs 3,013) after the Indian stock markets opened. However, the shares recovered slightly, closing at $37.42 (Rs 3,145). Adani Power, another key entity in the group, saw its shares fall over 10% to $7.37 (Rs 619) before rebounding to $8.04 (Rs 675), still down 2.9% from Friday’s closing price. Other listed companies within the Adani Group—Adani Energy, Adani Green, Adani Total Gas, and Adani Ports—also suffered declines ranging from 1% to 4%.

The turmoil was sparked by a report from Hindenburg Research, a New York-based firm known for its short-selling strategies, published on Saturday. The report alleged that Madhabi Puri Buch, Chairperson of the Securities and Exchange Board of India (SEBI), and her husband, Dhaval Buch, had invested in offshore funds linked to the Adani Group in Bermuda and Mauritius. The report further claimed that Gautam Adani’s brother, Vinod Adani, used these offshore funds to purchase and trade substantial shares in Adani Group companies.

According to recent estimates, Gautam Adani’s net worth has declined to $83.8 billion, a decrease of $1.5 billion due to Monday’s selloff. Despite this setback, Adani remains the second richest person in both India and Asia, trailing only Mukesh Ambani.

This is not the first time Hindenburg has targeted the Adani Group. In January 2023, Hindenburg disclosed a short position against the conglomerate’s listed firms and published a report accusing the Adani Group of engaging in a “brazen stock manipulation and accounting fraud scheme” over several decades. These allegations caused a massive plunge in Adani’s fortune, from a peak of $126 billion in early 2023 to less than $50 billion later that year. The Adani Group strongly denied the accusations, with its founder Gautam Adani labeling the report as a “malicious” attack not only on his company but also on India’s economic progress.

The controversy surrounding Adani has also taken on a political dimension in India due to his long-standing relationship with Indian Prime Minister Narendra Modi. In 2023, the Indian Supreme Court dismissed a request for an independent investigation into Hindenburg’s allegations. In retaliation, SEBI issued a show cause notice to Hindenburg, accusing the firm of violating Indian securities laws.

In response to Hindenburg’s latest report, Madhabi Puri Buch released a statement on Sunday, addressing the allegations directly. Buch confirmed that the investment in the offshore funds mentioned by Hindenburg was made in 2015, a time when both she and her husband were private citizens living in Singapore, nearly two years before she took her position at SEBI. Buch added that the two consulting firms she had established in Singapore became dormant as soon as she joined SEBI, and their existence was fully disclosed in her official declarations.

Buch’s statement also criticized Hindenburg, accusing the firm of attacking the credibility of SEBI and attempting to assassinate her character. She pointed out that Hindenburg had been served with a show cause notice for various violations in India, suggesting that the firm’s recent actions were an attempt to undermine SEBI’s authority. However, Hindenburg was quick to respond on social media. In a tweet, the firm argued that Buch’s statement confirmed her investment in an obscure offshore fund structure in Bermuda and Mauritius, alongside money allegedly siphoned by Vinod Adani. Hindenburg further alleged that the fund was managed by a childhood friend of Dhaval Buch, an Adani director at the time.

The Hindenburg report has ignited a firestorm in India’s political landscape. Opposition parties have seized on the allegations, with many calling for Buch’s resignation. Rahul Gandhi, a prominent leader of the opposition in Parliament, labeled the allegations “explosive,” emphasizing the potential risk to the savings of millions of Indians. He demanded an investigation into the matter, questioning who would be held accountable if investors’ money was lost—Prime Minister Modi, SEBI Chairperson Buch, or Gautam Adani himself.

As the fallout from these allegations continues, the Adani Group finds itself at the center of a growing controversy that extends beyond the financial markets and into the heart of Indian politics. The outcome of this situation could have far-reaching implications for India’s regulatory environment, investor confidence, and the future of one of its largest conglomerates.