Billionaire Gautam Adani, who was previously the world’s third richest man, has fallen to fourth place after an activist investment firm published a report on Tuesday accusing his company, the Adani Group, of “brazen” stock manipulation and accounting fraud worth $218 billion.
This report caused a sharp sell-off in shares, resulting in a $5.51 billion loss in Adani’s personal net worth by Thursday.
The Adani Group has denied the allegations made in the report by Hindenburg Research, calling them “baseless” and “malicious.”
The company is now considering taking legal action against the investment firm.
The sell-off in shares, which began on Wednesday, accelerated on Friday after US hedge fund billionaire Bill Ackman said he found the short seller’s report credible.
Shares tied to seven of the Adani Group’s listed companies fell by more than 5% on Wednesday, resulting in a $10.8 billion hit. This prompted the company to issue a strong denial of the report’s contents.
Adani is a self-made billionaire and India’s richest man, with a net worth of roughly $118 billion as of April 2022.
Much of this wealth was accumulated in the past three years through his company, the Adani Group, as the share prices of his key listed companies climbed. This pushed Adani’s rank to the third-richest man in the world, behind Elon Musk and Jeff Bezos.
The report by Hindenburg Research accuses the Adani Group of “brazen stock manipulation and accounting fraud scheme over the course of decades” and says that the firm has taken a short position in Adani Group companies, meaning it would benefit from a drop in their value.
The report also claims that the group’s key listed companies fell in value by 85% despite “sky-high valuations” and that substantial debt puts the group on “precarious financial footing.”
Hindenburg Research said on Thursday that it stood fully by its report and believed any legal action would be “meritless.”
The report also names several family members, including Gautam Adani’s brothers, Rajesh and Vinod Adani, as well as associates of the Adani Group, for their involvement in major bribery and tax evasion cases.