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India's Gautam Adani — the school dropout who rose to become one of the world's richest men — has suffered a stunning defeat, with his flagship firm calling off its $3.5 billion share sale after an attack by a small US investment firm over his business practices.
Key points:
- Adani Enterprises lost more than a quarter of its value on Wednesday
- Gautam Adani says the loss will "not have any impact" on operations or future plans
- Last week a report alleged improper use by the of offshore tax havens and stock manipulation by the Adani Group
The move came after Mr Adani's companies lost nearly $120 billion in the stock market as investors bailed out on the tycoon, who has built a conglomerate spanning ports, coal mines — including Queensland's Carmichael coal mine — food businesses and airports.
On Tuesday, the Adani Group appeared to have fought back the attack by New York-based short-seller Hindenburg and rallied investors behind the $3.5 billion share issue of flagship firm Adani Enterprises.
But Mr Adani could not staunch the sell-off in the market with Adani Enterprises — the crown jewel — losing more than a quarter of its value, saddling the investors who took part in his issue with huge paper losses.
It was a rare defeat for a man who has seemed unstoppable in recent years.
"Today the market has been unprecedented, and our stock price has fluctuated over the course of the day," Mr Adani said on Wednesday.
"Given these extraordinary circumstances, the company’s board felt that going ahead with the issue will not be morally correct."
He said they had strong cashflows and secure assets and the decision would "not have any impact" on operations or future plans.
It comes after a report by Hindenburg Research last week alleged improper use of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of seven listed Adani companies.
Mr Adani built his empire from scratch after starting out as a commodities trader.
India's Prime Minister Narendra Modi is from the same state as him and their relationship has long come under scrutiny by Mr Modi's opponents.
Until last week, Mr Adani was the world's third-richest person, according to Forbes, with a net worth of $178 billion.
He trailed behind Bernard Arnault and Elon Musk but on Wednesday slipped to number 15.
Married to dentist Priti Adani, he has two sons, Karan and Jeet, both of whom are involved in the company businesses.
As Mr Adani's empire swelled, stocks of his seven listed companies surged — in some cases more than 1,500 per cent in the last three years amid aggressive expansion.
He has denied allegations by Mr Modi's opponents that he has benefited from their close ties.
Report labelled a 'calculated attack'
Faced with a scathing attack by Hindenburg over the use of offshore entities in tax havens and high debt levels just as its public issue opened, the Adani Group mounted a stout defence in a 413-page response.
It said the report was a "calculated attack" on India and its institutions.
A senior executive compared the rout of its stocks with a colonial-era massacre saying investors were behaving like the Indian soldiers who fired on fellow-citizens under orders from British rulers.\
Many Indians later voiced their support for the beleaguered businessman on social media.
"India stands with Adani" was among the top trending hashtags on Twitter.
As the losses mounted in the market this week, Mr Adani himself appeared unfazed.
He landed in Israel to take formal control of Haifa port, which he had bought earlier in partnership with a local firm.
He promised further investments in Israel at the event, which was also attended by Israeli Prime Minister Benjamin Netanyahu.
Mr Adani is no stranger to controversy.
In Queensland, environmental activists for years protested against Adani's Carmichael coal mine due to concerns of carbon emissions and damage to the Great Barrier Reef.
The company has also faced protests in Mr Adani's home country, by fishermen against construction of a port in southern India's Kerala, in which he sued the state government and fishermen leaders.
Reuters