The Adani group may initiate legal action against US-based forensic financial research firm Hindenburg Research, which released a 103-page report on Wednesday highlighting accounting fraud, stock manipulation and improper use of offshore tax havens by the group.
In a statement issued on Thursday, the group said it is evaluating relevant provisions under the US and Indian laws for remedial and punitive action against Hindenburg Research.
“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 follow-on public offering from Adani Enterprises (AEL),” Adani Group legal head Jatin Jalundhwala said.
Also Read: Forget swanky cars and lavish garages; A look at Gautam Adani’s $50M private jet hangar
In response, Hindenburg Research said:”Regarding the company’s threats of legal action, to be clear, we will welcome it. We fully stand by our report and believe any legal action against us would be meritless.”
The statement went on to add: “If Adani is serious, it should also file suit in the US where we operate. We have a long list of documents we would demand in a legal discovery process.”
On Wednesday, shares of Adani group companies slumped by up to 8.1%, eroding the group’s combined market capitalisation by nearly Rs 87,000 crore.
The group said the forensic report had adversely affected 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, the statement by Jalundhwala said.
Hindenburg Research’s report titled ‘Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History’ alleged that Gautam Adani, founder and chairman of the Adani Group, had amassed a net worth of roughly $120 billion, adding over $100 billion in the past three years, largely through stock price appreciation in the group’s seven key listed companies, which had spiked 819% on an average of during the period.
Also Read: Adani group looks to invest in petrochemical, mining projects in Azerbaijan
“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,” Jalundhwala said.
Hindenburg Research has short positions in Adani Group companies through US-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities. Three of the Adani group companies — Adani Wilmar, Adani Power and Adani Total Gas — have gained more than 100% in the past year. Flagship Adani Enterprises is up nearly 95% despite Wednesday’s fall and the recent wobble ahead of its FPO. The anchor book of the ongoing AEL FPO was oversubscribed on Wednesday, with the company finalising allocation of 18.26 million FPO equity shares to 33 investors, aggregating to about Rs 6,000 crore.