Bloomberg News :
One of the biggest ever corporate takedowns by a short-seller may have been a blessing in disguise for billionaire Gautam Adani.
A year after US-based short-seller Hindenburg Research accused the Adani Group of fraud and “brazen” stock price manipulation in a bombshell report – allegations the conglomerate denies – the Indian tycoon has emerged stronger on some measures of business fundamentals.
His ports-to-power empire has trimmed debt, pared founders’ share pledges, won new backers from the US to the Middle East, bagged landmark projects and begun to communicate more often with investors and lenders.
It’s helping ferry a rising number of air passengers and cargo containers. It’s also building a new airport for India’s financial capital, Mumbai, and redeveloping the city’s sprawling Dharavi slum.
Fallout from Hindenburg’s report still lingers.
While Adani stocks have risen more than $90 billion from last year’s low, they remain about $60 billion short of their pre-Hindenburg peak.
Meanwhile, most of the group’s dollar bonds have recouped their losses.
Critics including opposition political parties have continued to raise questions about a perceived closeness to Prime Minister Narendra Modi, as well as a complex web of opaque offshore firms.
The auditor for the group’s ports business resigned last year, adding to questions around its accounting practices.
Adani Group representatives didn’t respond to requests for comment.
The conglomerate has said it complies with all laws and follows all accounting rules, while the billionaire has said that his firms don’t receive preferential treatment from the government.
Despite such issues, many investors now believe that the Adani empire is once again on an ascent.
A Supreme Court verdict rejecting appeals for a special investigation, new marquee investors and the US agency funding “have all given greater comfort to both institutional and retail investors,” said Chakri Lokapriya, managing director of RedStrawBerry LLP, a Chennai-based asset management company. The year after the short-seller broadside “has proved to be a blessing for the Adani Group,” Lokapriya said.
Much of the conglomerate’s resilience comes from its sprawling infrastructure empire – port terminals, power lines, airports, data centers, solar parks and cement plants.
That has put Adani in the center of an India boom that investors are keen to tap into.
The South Asian nation is emerging as a rare growth story in a flat-lining global economy hungry for China-alternatives.
Below is a selection of business metrics on Adani’s empire since the short-seller’s broadside on Jan. 24 last year:
Unencumbered and Rallying
Hindenburg’s report sent Adani stocks into a tailspin, eroding tens of billions in market value and leaving the founders vulnerable to margin calls on their pledged shares. Adani and his family prepaid $2.15 billion and have drastically reduced their pledged holdings.
The group also lured in almost $5 billion in investments, the bulk of it from star investor Rajiv Jain’s GQG Partners LLC which cut against the grain to buy stakes in four Adani firms in March and has plowed in more money since then.
The combined market value of 10 listed Adani companies is now at about $175 billion – a jump of around 112% from the record low of $82 billion in February last year after the short-seller report.
Five of them have erased all the losses seen after Hindenburg’s report.
The latest upswing in the stocks is being driven by the Indian Supreme Court’s verdict rejecting appeals for a federal probe or special investigation into Adani’s businesses, and a $553-million investment by a US-backed agency in the group’s port business in Sri Lanka.
