Adani explores legal action; bring it on, says Hindenburg

“We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg,” said Jatin Jalundhwala, group head, legal, in a statement issued by Adani Group.

Companies linked to the group also said that they are planning a detailed response on Friday to the short seller’s report that they labelled as “bogus,” according to bondholders who participated in a conference call with Adani executives.

Hindenburg said in a 129-page document that its two-year effort and investigations led to several countries, including the tax haven of Mauritius.

Researchers from Hindenburg had pointed out the complicated maze of transactions undertaken by many of the listed Adani Group firms.

“Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its seven key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations,” Hindenburg said. It said the investment group took a short position in Adani companies through US-traded bonds and non-Indian-traded derivative instruments.

Slamming Hindenburg, Adani Group said the “maliciously mischievous” and “unresearched” report published on 24 January has adversely affected the group, 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,” it added.“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. [“We hold short positions in Adani Group Companies through US-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities.”],” it said.

“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 FPO from Adani Enterprises,” it added. The ₹20,000 crore FPO of group flagship Adani Enterprises, which opens on Friday and closes on 31 January, on Wednesday saw a clutch of foreign and domestic investors buy shares worth almost ₹6,000 crore as part of the anchor book allocation.

In a statement on Twitter, Hindenburg said it fully stands by its report and would in fact welcome any legal action by Adani group. “If Adani is serious, it should also file suit in the U.S. where we operate. We have a long list of documents we would demand in a legal discovery process,” the statement posted on Twitter read.

In the statement, Hindenburg added that in the 36 hours since it released the report, Adani hasn’t addressed a single substantive issue they raised. “At the conclusion of our report, we asked 88 straightforward questions that we believe give the company a chance to be transparent. Thus far, Adani has answered none of these questions,” it said “Instead, as expected, Adani has resorted to bluster and threats. In a statement to media today, Adani referred to our 106 page, 32,000 word report, with over 720 citations and prepared over the course of 2 years, as “unresearched” and said it is “evaluating the relevant provisions under US and Indian laws for remedial and punitive action” against us.”

Bloomberg contributed to the story.