How Gautam Adani Made (and Could Lose) a $147 Billion Fortune

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Indian businessman built an empire by working closely with the Modi government; a U.S. short seller has put it at risk

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His name is plastered on roadside billboards and on the airports and shipping docks he operates. His power plants light Mumbai office towers and irrigate rural fields, fueled by coal he imports from mines as far away as Australia.

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So when U.S. short seller Hindenburg Research alleged last week that the Adani Group—the energy and infrastructure conglomerate he controls—was engaged in wide-ranging fraud, the fallout was widespread and severe.

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His companies’ stocks and bonds plunged, leaving investors with billions of dollars in losses and igniting a bitter fight that the company cast as an assault on the nation itself. On Wednesday, Mr. Adani’s flagship company, Adani Enterprises, canceled a stock sale of up to $2.5 billion.

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As tens of millions of Indians joined the middle class over the past decade, Adani companies worked hand-in-glove with the government of Prime Minister Narendra Modi to modernize the country’s infrastructure, from airports to shipping docks, while importing enough fuel to keep the country’s economy of 1.4 billion people on an upward trajectory.

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Now, Mr. Adani’s symbiosis with the Indian economy is being tested. The 104-page report released by Hindenburg Research alleged that Adani Group had engaged in fraud, including stock-market manipulation by using a network of overseas shell companies and questionable accounting and business practices. The Adani Group’s 413-page rebuttal called the short seller’s report “nothing but a lie.”

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At a ceremony marking the Adani Group’s acquisition of the Port of Haifa in Israel, he cited the conglomerate’s strong ties to the Israeli economy.

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The opposition Congress party has used the Hindenburg report to cast the Adani Group as an oligarch enabled by the Modi government

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“It says a lot about what corporate India is like,” said Hemindra Hazari, a Mumbai-based analyst who specializes in the Indian capital markets. Investors, he said, “are clearly very shaken up.”

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Debt-research firm CreditSights published a report in August describing Adani Group as “deeply overleveraged.” Adani Green Energy had a debt-to-equity ratio of 2,023% at the end of the fiscal year ended March 31, 2022, the report said, while Adani Transmission’s was 272%.

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In its lengthy rebuttal, Adani Group said the report was full of unsubstantiated allegations that created a misleading narrative. Over the past five years, the firm said, the conglomerate has lowered its ratio of net debt to earnings before interest, taxes, depreciation and amortizatio.

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Late on Wednesday, the day the company was meant to price the deal, it instead said that it would cancel the $2.5 billion share sale.

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