Gautam Adani’s decision to scrap a multibillion-dollar share sale this week could affect investor confidence in the emerging economy.
Just 10 days ago, Gautam Adani and his sprawling energy-to-ports empire looked invincible. Now, a damning short-seller attack has left the billionaire battling the worst crisis of his corporate life – and is raising bigger, darker questions about India’s credibility as a global growth engine and a destination for international investors.
The small, but famed, US short seller has revived old doubts about corporate governance at the Adani conglomerate. The fallout from its almost 100-page report threatens to undermine investor confidence in India more broadly, and in the nation’s regulatory framework – whether its claims ultimately prove to be true or not.
Banks such as HSBC and companies like Apple are expanding in India to hedge their exposure to China, where a government crackdown on businesses and an erratic pandemic policy have turned investors wary.“The truth is that Adani’s scandal is not coming at the best of all times for India as China is reopening,” said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis. “Foreign investors are clearly watching.
In a 413-page response, Mr Adani said Hindenburg’s conduct was “nothing short of a calculated securities fraud under applicable law”. Foreign institutional investors pulled a net $US2 billion out of India’s stock market from the country in January 27-31, the biggest three-day sell-off since March, data shows.“The Adani-related headlines are generating a high level of negative attention, which could dampen investor appetite for Indian stocks,” said Jian Shi Cortesi, a fund manager at Zurich-based GAM Investments, with more than $US80 billion in assets.
Clad in traditional attire, he signed off with two words at the end of his televised speech on Thursday:For years, Mr Adani’s companies have delivered the sort of infrastructure projects India has needed. His integrated businesses touch hundreds of millions of Indians each day, from the chain of ports that deliver coal from Adani mines to company power plants running electricity to households through his transmission units.
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