The US investor targeting Indian conglomerate Adani Group over what it claims is the “biggest con in corporate history” has dared the company to sue, given it would open the coal producer to further scrutiny. Hindenburg Research’s report has already wiped billions of dollars of value from the sprawling empire of Gautam Adani, the world’s third richest man, and drawn in the contentious Carmichael coal and rail project in Queensland.
Hindenburg said in a statement that Adani had not responded to any of the substantive issues raised in its report that accused the company of engaging in a “brazen stock manipulation and accounting fraud scheme”. “Instead, as expected, Adani has resorted to bluster and threats,” the statement said.
“Regarding the company’s threats of legal action, to be clear, we would welcome it. We fully stand by our report and believe any legal action taken against us would be meritless. “We have a long list of documents we would demand in a legal discovery process.” Activist investors like Hindenburg typically take a short position in a listed company they believe is heavily overvalued and has poor or fraudulent business practices. Their reports can lead to sustained pressure on the share price of their targets.
Founded by Nate Anderson, Hindenburg is a US activist fund named after the 1937 airship disaster that looks for stocks that could crash. It has accused Adani of loading companies with debt that puts the entire group on a “precarious financial footing”. The battle comes amid a large scheduled fundraising attempt by Adani Enterprises, the company’s listed flagship, in which Adani is seeking US$2.5bn from investors to fund capital expenditure and reduce debt.
Adani has threatened to seek “remedial and punitive” action against Hindenburg over what it said was a “maliciously mischievous, unresearched report”. “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,” Adani Group’s legal head Jatin Jalundhwala said in a statement on Thursday.
The statement said Adani was disturbed by the “intentional and reckless attempt” of a foreign entity to mislead investors and the general public and sabotage the public offering. Adani has previously said that allegations in the report had been discredited and rejected by India’s highest courts, and that Hindenburg had not attempted to verify information with the company before publishing….
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