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More than 100 billion dollars market value gone: India's flagship entrepreneur
Gautam Adani
is trying to save his life's work
Photo: Rajanish Kakade/AP
The Indian People's Assembly 'Lok Sabha' meets in a pillared rotunda in Delhi.
All around, food stall operators, rickshaw drivers and street vendors wrestle day after day for their little piece of the Indian economic miracle at a volume that makes the calm in the building complex appear all the more elegant.
But on Thursday morning, the mood on both sides of the walls adjusted within minutes.
Opposition politicians called for an independent investigation into the allegations against the largest Indian industrial conglomerate Adani, and above all for Prime Minister
Narendra Modi
(72) to finally speak out!
"Down with Modi-Adani!" opposition politicians shouted, then all meetings were suspended for the rest of the day.
"A Calculated Attack on India"
The collapse of the mining, logistics and media company that began a week ago has finally reached the status of a social drama with the scandal: the political and personal connection to company founder
Gautam Adani
(60) is becoming a threat to Indian Prime Minister Modi.
The price losses of shares in the Adani conglomerate now exceed 100 billion dollars.
India's central bank is currently asking the country's commercial banks about credit risks.
International banks announce that effective immediately they will no longer accept Adani paper as collateral.
And in all this, the company itself is calling off the $2.5 billion share offering planned as a signal of strength on the grounds that it does not want to drag the country into a downward spiral.
The panic is there and the way out is still completely uncertain.
On January 24th, the New York short seller Hindenburg published research, according to which money was being laundered, numbers manipulated and company values inflated in the nested Adani company network with many offshore companies.
Hindenburg thrives on finding overvalued companies and speculating on a fall in value by short-selling stocks.
The company is believed to be a big beneficiary of the fall in share prices at coal and iron ore mining holding company Adani Enterprises and sister companies such as Adani Green Energy, Adani Transmission and Adani Total Gas.
Fear of a crisis of confidence
Despite a 413-page counter-speech on Sunday, the company only flatly rejected the allegations and the specific questions asked, and at the same time tried to fraternize with the Hindu nationalist Prime Minister Modi and all Indians.
The New York attacker is riding "a calculated attack on India, the independence, integrity and quality of Indian institutions, and India's growth story and ambition".
"After the withdrawal in the share placement and the price drop, the market is losing confidence"
Monica Hsiao,
head of investment at Hong Kong investment fund Triada Capital
The problem is that without concrete answers, Adani relies solely on the trust of politicians, banks and investors, and that is disappearing at breakneck speed.
"We made nice profits last week trading in the volatile Adani shares and also believed that the companies were on a solid footing because of the upcoming share placement," said the investment director of the Hong Kong investment fund Triada Capital on Thursday, according to the Reuters news agency ,
Monica Hsiao
.
"After the retreat in the share placement and the price drop, the market is losing confidence."
Crash in the richest list
The attempted nationalist fraternization could even boomerang a few days later.
Because Adani has long been a threat to the entire country: The company is India's largest airport operator and handles 25 percent of passenger traffic and 40 percent of air freight, and the group is the country's largest port and logistics company with a 28 percent market share, the largest integrated energy company, the second largest cement producer.
If Adani falls, the Indian economy will tremble.
"Adani could have sparked a crisis of confidence in Indian equities and that would have wider implications," said
Ipek Ozkardeskaya
of Swissquote Bank.
It is possible that political pressure was already being exerted on Adani in the background to cancel the share placement in order to prevent a conflagration.
Indian investors in particular had subscribed to the papers, which had long been in free fall.
"Given the extraordinary circumstances, the company's board did not believe it was morally right to go through with the increase," Gautam Adani said.
They were canceled "to protect investors from potential losses".
more on the subject
Gautam Adani's multi-billion loss: That's behind the attack on India's superstarBy Tim Bartz and Claus Hecking, DER SPIEGEL
Gautam Adani: World's third richest man takes control of Indian TV station
Investments of the billionaires: The CO₂ fireworks of the super-rich
Don't underestimate Adani.
Raised in a middle class family, he was a sorter in a diamond trading company and later a factory manager before opening his first commodity trading company in 1988.
The shares of his Adani Enterprise gained 3300 percent in value within three years.
Until a week ago, he was the third richest person in the world behind French luxury entrepreneur
Bernard Arnault
(73) and Tesla 's
Elon Musk
(51).
Since the Hindenburg attack, he has dropped to 13th place.
Either way, the times of rapid growth are over.
"Adani's plans will be noticeably slowed down," commented his biographer, Indian journalist
RN Bhaskar
.
"Investors will be cautious because stocks will do poorly for the foreseeable future," said
Brian Freitas
of analyst firm Periscope Analytics, according to the AP news agency.
"And if they don't have enough equity, they will need outside capital. Given the situation, lenders will think twice about it in the future."