By Shivam Patel, Aditi Shah and Aditya Kalra
NEW DELHI (Reuters) – Indian Gautam Adani, the Indian school dropout-turned-billionaire who became Asia’s richest man, faces arguably the biggest challenge of his career after an American short seller cast doubt on his business practices and force the actions of their companies. and his reputation.
Adani, whose home state is Gujarat in western India, built his business empire from scratch after starting out as a commodity trader. India’s Prime Minister Narendra Modi hails from the same state and their relationship has been the subject of intense scrutiny from Modi’s opponents for years.
Adani’s business empire grew rapidly and his wealth skyrocketed. His interests span ports, power generation, airports, mining, cooking oils, renewable energy and, more recently, media and cement.
He rose to become the third richest person in the world according to Forbes, with a net worth of $127 billion, behind only Bernard Arnault and Elon Musk. Married to dentist Priti Adani, he has two children, Karan and Jeet, both of whom are involved in the company’s business.
Despite his wealth, the 60-year-old, who comes from a middle-class textile family, was much less well known than other billionaires in a country where many inherit their wealth.
His business style was described as “very practical,” according to a person with direct knowledge of his dealings.
As Adani’s empire grew, the shares of his seven listed companies rose, in some cases more than 1,500% in the past three years amid aggressive expansion. He denied accusations by Modi’s opponents that he had benefited from their close ties.
In a 2014 interview with Reuters, when asked if he was friends with Modi, Adani said he has friends across the political spectrum, but avoids politics.
He has said that no political leader is behind his success and when asked about Modi’s use of Adani’s corporate jets during the interview, Adani said that Modi “pays in full”.
In recent years, the $220 billion Adani Group empire has attracted foreign investment: France’s TotalEnergies, for example, partnered with Adani last year to develop the world’s largest green hydrogen ecosystem.
More recently, Adani has taken a proactive approach to building her public image, giving interviews to local and foreign media.
Appearing on a popular Hindi television show this month called ‘People’s Court’, Adani sat on a mock witness stand inside a courtroom and answered questions about his conglomerate, offering an unusual level of scrutiny. He described himself as “a shy person” and attributed his rise in popularity in part to the political attacks he has faced.
The Modi government has denied the accusations of favoring Adani.
“People came to know who Adani (was) because of Rahul ji’s constant attacks during the 2014 election and after that,” Adani said during the show, referring to opposition Congress Party leader Rahul Gandhi.
Three weeks later, shares of his group’s publicly traded companies plunged on Friday, taking their cumulative losses to $48 billion this week. Short seller Hindenburg Research on Wednesday accused Adani’s companies of misusing offshore tax havens, noting his concerns about high debt. Adani called the report baseless and said he was considering taking action.
The Adani Group website says its vision is to balance “growth with goodness” as it aims to build nationally relevant assets and transform lives through self-sufficiency and sustainability.
Adani is no stranger to controversy. The most recent was months of protests by fishermen against the construction of a $900 million port in Kerala, southern India, suing the state government and fishermen’s leaders. And in Australia, environmental activists have protested for years against Adani’s Carmichael coal mine project in Queensland over concerns about carbon emissions and damage to the Great Barrier Reef.
Their latest challenge is how to deal with an unprecedented share price plunge, as the group’s flagship firm, Adani Enterprises, this week launched the country’s largest secondary public offering of shares, aiming to raise $2.5K. millions.
The share price on Friday fell well below the offer price, raising questions about its success.
Image guru Dilip Cherian told Reuters the Hindenburg Report, and its fallout, could carry a reputational risk for Adani, but he could take steps to limit that damage and reassure investors about the asset and financial strength of the company. group and ensure that the share sale is a success.
“In terms of the kind of stellar rise it’s had, this is a danger,” Cherian said.
Adani told India Today TV in December that people raising questions about the group’s debt had not delved into its finances, without saying who he was referring to.
As the market crash in Mumbai stocks unfolded, Adani was seen addressing a meeting at the federal energy minister’s office in New Delhi. It is not known what was discussed and Adani Group did not respond to a request for comment on Friday.
Adani Group’s consolidated gross debt stands at $23.34 billion, says Jefferies. While Hindenburg alleged that Adani’s key publicly traded companies had “substantial debt” that has put the entire group on “precarious financial footing,” the Adani Group has repeatedly said its loans are manageable and no investors have expressed concern.
(Reporting by Shivam Patel, Aditi Shah and Aditya Kalra in New Delhi; Additional reporting by Nikunj Ohri in New Delhi and Chris Thomas in Bengaluru; Editing by Elaine Hardcastle)
Copyright 2023 Thomson Reuters.
