How Asia’s richest man lost his crown in just a few days

Gautam Adani, billionaire and chairman of the Adani Group, during an event at Haifa Port in Haifa, Israel, on Tuesday, Jan. 31, 2023. Adani, the Indian billionaire whose business empire was rocked by allegations of fraud by short seller Hindenburg. Research, said his company will make more investments in Israel.

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Adani shares continued to see heavy losses during trading in Mumbai on Wednesday – even as the group managed a gain a day earlier.

Adani received a vote of confidence from investors on Tuesday when its $2.5 billion public offering (FPO) was fully subscribed on the last day.

This sharp decline reflects a decline in investor sentiment from a report released by short-selling firm Hindenburg. The January 24 report accused Adani group companies of “brazen stock manipulation and accounting fraud”.

On Wednesday, shares of Adani Group fell after several days of volatile trading.

Adani shares On Wednesday, it fell by 28%. Adani port and special economic zone It decreased by 19% Adani Green Energy Down more than 5%, Total Gas Adani lost 10% Adani transfer closed down 2.8%.

According to Reuters, the stock fell to 84 billion dollars after announcing this news.

Gautam Adani, the group’s founder and chairman, has lost his place as Asia’s richest man to Mukesh Ambani, chairman of Reliance Industries, according to Forbes.

Hindenburg, which announced that it has a short position in Adani Group, will benefit from the decline in the value of these shares.

Adani’s battle with the retailer has put the group’s Wall Street exposure — nearly $9 billion, according to JP Morgan — into the spotlight.

How did we get here?

In just one week, Indian billionaire Gautam Adani lost more than $34 billion of his net worth, according to a research institute. Bloomberg Billionaires Index

Here is a timeline of the major events leading up to this.

January 25: Ahead of the opening of the Indian market on Wednesday (Asia time), Hindenburg Research announced its short position in Adani group companies through US-traded bonds and non-Indian derivatives. Adani-related stocks suffered heavy losses on the trading day. Gautam Adani’s net worth fell by $6 billion overnight.

January 26: Indian market is closed due to holidays.

January 27: Despite the continued sell-off seen in the group’s companies, Adani has opened subscriptions for its next public offering in the amount of $2.5 billion. The net worth of this billionaire decreased by 20.3 billion dollars to 92.7 billion dollars.

January 28-29: The Adani Group issued a lengthy 413-page response over the weekend, warning of legal action against Hindenburg, claiming that the allegations against the Indian company had been leveled. It was a “calculated attack on India” and its institutions.

Hindenburg hit back, calling Adani Group’s response “bloated” and claiming it “ignores every key claim made”.

January 30: In an interview with CNBC-TV18, Adani Enterprise Group CFO Jogshinder Singh defended the group. He told the CNBC affiliate that the value of Adani’s company has not changed simply because of stock price fluctuations. The shares of the companies of this group continued to face more losses. Adani’s net worth decreased by $8 billion to $84.5 billion

January 31: Adani Enterprises’ $2.5 billion stake sale was fully accepted on the last day of subscriptions, despite analysts’ concerns that it could fall through.

Who is Gautam Adani?

Gautam Adani: Asia's richest man lost $28 billion in one month

What are the consequences?

Hindenburg’s claims have raised questions about Adani Group’s expansion, largely fueled by debt, and the lax regulations that allowed the buyout to go ahead.

However, economists CNBC spoke with dismissed any long-term spillover effects.

“I think the Adani Group events are seen in isolation,” Harald van der Linde, head of Asia Pacific equity strategy at HSBC, told CNBC. “India’s equity story is one of the best across the region. Growth is more visible and predictable than elsewhere in the region.”

“In the short term, sentiment and flows may have an adverse impact, but this should not be a sustained impact in the medium term,” Sonal Varma, Nomura’s chief economist for India and Asia outside Japan, told CNBC..

The key drivers of India’s medium-term growth outlook remain intact, corporate and bank balance sheets are much stronger, reforms are focused on investment and productivity gains, and India as a large market will benefit from continued supply chain diversification. he added.

India's debt-to-GDP ratio is high, but not difficult, says the smart investor.

Asked whether investors should buy Adani shares now, David Coe of Smart Investors put it bluntly: “Better to stay out of trouble than out of trouble later.”

“What Hindenburg is pointing to is that there is a debt problem. And it may not be reflected in the stock price, but there may be a debt problem,” Coe said on CNBC.Asian street signs.

“It has a lot of bonds outside India – what happens if the value of those bonds deteriorates, that will have an impact on the company,” he said.

“Whether you believe the Hindenburg report or not, I think something has to happen. Something has to be clear before investors start coming in,” he added.

CNBC’s Seema Modi contributed to this report.

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