The business empire of the former world’s third-richest man has been facing serious backlash in recent days. The reason behind the backlash can be attributed to the Hindenburg report which was published on January 24, 2023.
The report raised serious accusations against the Adani Group and accused them of committing different crimes like fraud and theft of taxpayer’s money, money laundering, and so on.
The report accused the firm of committing the mentioned crimes for over years and the report had seriously affected the company. Gautam Adani, who is the chairperson of the Adani Group was earlier placed third on the list of richest people in the world and after the Hindenburg report was published on January 24, Adani was taken off the list.
Following the accusations against the Adani Group had been facing a rapid decline in their share and the company value.
In light of the recent events, Credit Suisse Group, which is one of the world’s largest financial service providers has announced that the firm will not be accepting bonds of Adani Group as collateral for margin loans. The decision from the reputed financial services firm has given rise to a panic selling spree.
The firm had recorded almost a $23 billion wipeout in one trading session on Wednesday.
Following the decision of Credit Suisse, the investment banking firm Citigroup has also made it clear that they won’t be accepting securities of Adani Gripo as collateral for grating margin loans. The decision by Citigroup came just a day after the decision by Credit Suisse.
The lending arm of Credit Suisse assigned a lending value of zero to long issued by Adani Group.
As Citigroup has followed the decision and the fact that Adani Group has not come up with a solution or response to save their reputation, other major global lending drinks are also expected to join the decision and keep their distance from securities issued by Adani Group.
Before the allegations started by the Hindenburg report, Gautam Adani held the title of richest Asian and the third richest person in the world. The Hindenburg report accused his firm of different criminal charges like market manipulation, theft of taxpayers’ money, money laundering, fraud, and so on.
The publishers of the Hindenburg report stated that they have published the report after extensive research and studies but Adani Group has dismissed the report and stated that the allegations raised were not true.
They argued that the report was based on misinformation and also that it was an attempt to sabotage the FPO plans of Adani Group.
Even though the company secured a full subscription in the earlier week, the FPO by Adani Enterprises was called off on Wednesday.
As the company had been in the shadows of the recent accusations, the share sale did not attract much participation as anticipated. So, with an unsuccessful FPO and distancing from different global lending firms, it is quite difficult for the firm to overcome this situation.
As the FPO was canceled, the chairman of the company Gautam Adani himself gave an explanation regarding the situation and the reason behind canceling the FPO. According to his statement, the market had been unprecedented, and their stock price fluctuated dramatically over the course of some days.
So, the company thought it was not morally correct to go ahead amidst such issues. Adanio also added that the investors and customers were the company’s prime concern and protecting them from any potential financial loss was given more importance.
The 20,000 crore share sale was called off in light of the controversies caused by the Hindenburg report.
Adani also thanked their investors for their faith and belief in the company even after the volatility in their stock over the last few weeks.
The Hindenburg report was published by Hindenburg Research, which is an investment firm. The firm was founded by Nathan Anderson in 2017.
The Hindenburg report who accused the Adani Group was published on January 24 23023 and the report raised serious accusations against the firm and blamed them for financial fraud.
Even though Adani Group has dismissed the report by saying that it is just a compilation of misinformation, the publishers of the report stand by their statements. They say that they have sourced their pieces of information from sources close to the firm like people who used to work for the company in the earlier days.
Another argument of the Adamni Group was that the report was aimed at disturbing the FPO which was to be hosted by their flagship group.
The report also shed light on Vinod Adani, who is the elder brother of Gautam Adani, the chairman of the Adani Group. The report found out that Vindo Adani was the center of different government investigations against the Adani Group.
Also Read:- Hindenburg Report On Adani: What We Know So Far
In a statement that was released on Sunday, the Adani group stated that the report was nothing but “a calculated security fraud under applicable law.” The company also added that the attack was not merely on the Adani Group or any company for that matter but the main target behind the attack was India – an attack on the independence, integrity, and quality of Indian institutions.
They stated that the attack was in fear of development and the rise in quality of growth in India.
Even after their arguments, the shares of Adani Group met as a loss on Wednesday, which was the fifth straight day of loss for the company. The trading stocks of Adani group were down 26 percent in trading sessions.
Even though the company faced a loss for five consecutive days, Adani stated that the balance sheet is strong with cash flows and secure assets. He also reminds us that the company has a very clean track record of clearing its own bets.
He also assured their investors that the company will focus on long-term value creation. The management aims to review its capital market strategy once the market stabilizes.
Adani ended his statement by sharing his hope and faith and confidence in having the trust of their investors and coming back strongly into the market once again.
