Adani Group, the Indian conglomerate that was rocked by a Hindenburg Research report last year, faced another major sell-off in its shares on Monday after short sellers accused the head of India’s markets regulator of having ties to an offshore fund also used by the group.
By the close of trading, the market capitalization of Adani’s companies had fallen by about $2.4 billion, or 1%, but that represented a significant recovery from earlier losses of more than $13 billion.
The tussle between Hindenburg Research and Gautam Adani’s Adani Group began 18 months ago when US short sellers alleged that Adani had improperly used tax havens, a claim the group again denied on Sunday, saying its overseas holding structure was fully transparent.
Citing a whistleblower document, Hindenburg on Saturday said Madhavi Puri Book, who will be the chairperson of the Securities and Exchange Board of India (SEBI) from 2022, has a conflict of interest in the Adani matter due to past investments.
Buch said the allegations in the report were without merit, and the regulator said in a separate statement that Hindenburg Research’s allegations against Adani Group had been properly investigated.
Shares in the group’s flagship Adani Enterprises closed down 1.1% on Monday, while Adani Ports, Adani Total Gas, Adani Power, Adani Wilmar and Adani Energy Solutions fell between 0.6% and 4.2%. Only Adani Green bucked the trend, closing up 1%.
“This is the second time allegations have been made. A lot of investigations have taken place in the last one-and-a-half years. This is a temporary, knee-jerk reaction. Things will return to normalcy,” said Sunny Agrawal, head of equity fundamental research at SBICAPS Securities.
Since Hindenburg’s initial report in January 2023, investments from Abu Dhabi-based International Holding and U.S. boutique investment firm GQG Partners have restored some investor confidence, helping to narrow Adani Group’s share price losses to about $32.5 billion from $150 billion immediately after.
Buch called Hindenburg’s allegations an attempt at “character attack” following regulatory enforcement actions and “show cause” notices against short sellers who violated India’s rules.
A show cause notice indicates intent to take disciplinary action if a satisfactory explanation is not provided.
Adani Enterprises shelved a record $2.5 billion takeover bid after the first round of Hindenburg allegations and plans to launch a $1 billion share sale by mid-September.
Adani Energy raised $1 billion from U.S. investors and sovereign wealth funds earlier this month.
“We are likely to see a short to medium term emotional impact on Adani shares as retail investors are under pressure due to allegations against SEBI,” said Kranthi Batini, director, equity strategy at WealthMills Securities.
As the latest allegations gained political attention, Ravi Shankar Prasad, a member of the ruling Bharatiya Janata Party, said: “Instead of complying with SEBI’s show-cause notice, Hindenburg has released this report, which is a baseless attack.”
“SEBI and (Buch’s) family have reacted and we have nothing to add to it,” he told reporters.
But Leader of the Opposition Rahul Gandhi said on X that “the integrity of SEBI, the securities regulator entrusted with protecting the wealth of small retail investors, has been seriously undermined by the allegations made against its chairman.”
