BackAdani group exploring legal options against short seller Hindenburg
It said that the maliciously mischievous, un-researched report published by Hindenburg Research on 24 January has adversely affected the Adani Group, its shareholders, and investors
PremiumMUMBAI: The Adani Group is exploring legal options under both US and Indian laws against Hindenburg Research, which in a report called out debt and governance issues at the conglomerate, leading to stocks of group companies losing ₹85,000 crore in value in Wednesday's trade.
"We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research," as per a comonay statement on Thursday citing Jatin Jalundhwala, Group Head - Legal, Adani group.
Hindenburg claimed that its 129-page report was the result of two-year worth of efforts and its investigations led them to several countries, including the tax haven of Mauritius.
Researchers from Hindenburg pointed out a complicated maze of transactions undertaken by many of the listed Adani Group firms. The report highlighted alleged shell firms founded in tax havens, including the United Arab Emirates and Mauritius, which have been used to give loans to some listed and private companies often without making requisite disclosures.
“Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its seven key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations," Hindenburg said in the report.
The report said the investment group took a short position in Adani’s companies through US-traded bonds and non-Indian-traded derivative instruments.
In its statement, Adani group said that the maliciously mischievous, un-researched report published by Hindenburg Research on 24 January has adversely affected the Adani Group, its shareholders, and investors. The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens, it added.
“Clearly, the report and its unsubstantiated contents were designed to have a deleterious effect on the share values of Adani Group companies as Hindenburg Research, by their own admission, is positioned to benefit from a slide in Adani shares. [“We hold short positions in Adani Group Companies through U.S.-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities."]," the statement said.
“We are deeply disturbed by this intentional and reckless attempt by a foreign entity to mislead the investor community and the general public, undermine the goodwill and reputation of the Adani Group and its leaders, and sabotage the FPO (Follow-on Public Offering) from Adani Enterprises," it added.
The ₹20,000 crore follow-on public offer (FPO) of Adani Enterprises, which opens for public subscription on Friday and closes on 31 January saw a clutch of foreign and domestic investors buy shares worth almost ₹6,000 crore as part of the anchor book allocation.
Investors who participated in the anchor book include Singapore based Maybank Securities Pte Ltd, insurance behemoth LIC, SBI Employees Pension Fund, SBI Life Insurance Co, HDFC Life Insurance Co, Abu-Dhabi-based sovereign wealth fund ADIA, Goldman Sachs Investment and Morgan Stanley Asia.
The price band for the share sale has been fixed between ₹3112 and ₹3276, with an additional Rs64 discount for retail investors.
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