Adani’s 143b corporate crisis shakes investors’ faith in India

Country’s regulatory framework in focus after report on billionaire’s empire

NEW YORK Just two weeks ago, Indian tycoon Gautam Adani and his sprawling energy-to-ports empire looked invincible. Now, a damning short-seller report has left the billionaire battling the worst crisis of his corporate life and is raising bigger, darker questions about India’s credibility as a global growth engine and a destination for international investors.

The Adani Group has shed US$108 billion S$143 billion) in market value since Hindenburg Research accused it of stock manipulation and accounting fraud in a Jan 24 report. But it was only when the _ tycoon _ scrapped a US$2.4 billion share sale on Feb 1 that the potential for lasting impact became clear. Mr Adani’s rebuttal to the report had failed to reassure investors. Once ranked No. 2 among the world’s wealthiest, he has tumbled to No. 21 on the Bloomberg Billionaires Index.

Hindenburg, the small but famed United States short-seller, has revived old doubts about corporate governance at the Adani conglomerate. The fallout from its almost 100-page report threatens to undermine investor confidence in India more broadly, and in the nation’s regulatory framework whether its claims ultimately prove to be true or not.

“Things are moving very fast in the market, with a potentially major reassessment of the risks of investing in Indian equities by international investors,” said Mr Gary Dugan, chief executive officer of Global CIO Office, an asset manager and financial advisory firm based in Singapore. That reassessment includes governance, corporate transparency, nepotism and indebtedness.”