Shares of India’s Adani Group took a significant hit on Monday, losing $2.4 billion in market value following fresh allegations from US-based short-seller Hindenburg Research.
The report accuses Madhabi Puri Buch, the chair of the Securities and Exchange Board of India (SEBI), of conflicts of interest that have allegedly obstructed a thorough investigation into previous fraud claims against the Adani Group.
This development has reignited investor concerns and led to sharp declines in several of the conglomerate’s key stocks.
Adani Group stocks tumble
The market response was swift, with Adani Group companies experiencing sharp losses during Monday’s trading session.
Adani Enterprises, the group’s flagship company, saw its shares fall by as much as 5% before recovering some ground by the session’s close.
Other companies within the conglomerate, including Adani Total Gas, Adani Power, Adani Wilmar, and Adani Energy Solutions, also recorded significant declines, contributing to the overall $2.4 billion drop in market value.
Hindenburg’s allegations: Conflict of interest concerns
The latest report from Hindenburg Research, published on Saturday, centers on claims that SEBI’s chair, Madhabi Puri Buch, and her husband, Dhaval Buch, previously held investments in offshore funds with alleged ties to the Adani Group.
Hindenburg argues that these connections undermine the impartiality of SEBI’s oversight and cast doubt on the integrity of its investigation into the conglomerate’s financial activities.
Hindenburg’s report builds on earlier accusations made in January 2023, where the firm alleged extensive stock manipulation and corporate fraud by the Adani Group.
This initial report led to a massive sell-off, erasing over $100 billion in shareholder value.
The new allegations have added fresh fuel to ongoing concerns about the conglomerate’s governance practices and its relationship with regulatory authorities.
In response to the latest accusations, both Madhabi Puri Buch and Dhaval Buch have strongly denied any wrongdoing, dismissing the report’s claims as unfounded.
The Adani Group stated on Sunday, labeling Hindenburg’s allegations as a “red herring” and asserting that the company’s offshore holding structure is fully transparent and compliant with all relevant regulations.
The Adani Group, led by billionaire Gautam Adani, has been working to rebuild investor confidence since the fallout from Hindenburg’s initial report 18 months ago.
While the group’s shares have partially recovered, the latest allegations have renewed investor concerns and cast a shadow over the conglomerate’s ongoing recovery efforts.
What’s next for Adani and SEBI
As the situation unfolds, all eyes will be on further developments from SEBI, Hindenburg, and the Adani Group.
The potential fallout from these allegations could extend beyond the immediate financial impact, possibly influencing regulatory practices and investor sentiment toward one of India’s largest and most influential conglomerates.
Given the Adani Group’s extensive involvement in sectors ranging from commodities trading to renewable energy, the outcome of this controversy could have wide-reaching implications for the Indian market.
Investors and regulators alike will be closely watching how these allegations play out, and how they might shape the future landscape of corporate governance in India.
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