Risk register · entry
Q4 · Where models dieAdani-Hindenburg rout
A short-seller report erased $150B from an over-levered conglomerate.
The world stops matching the model. Regime change and leverage turn a small error fatal.
Why this quadrant
Leverage against listed holdings is priceable while the market accepts the reported ownership. Hindenburg alleged that some of it sat in Mauritius vehicles connected to the family, which if true would make the free float, and so the collateral, other than it appeared. That has not been adjudicated. The repricing is not in question: about 150 billion dollars of market value in a month, and a fully subscribed 2.5 billion dollar share sale withdrawn.
The record
- Hindenburg report published 24 January 2023certain
- Adani Group lost approximately 150 billion dollars in market value by late February 2023certain
- Gautam Adani fell from world's 3rd richest (about 121 billion dollars) to 11th richest (about 84.4 billion dollars) by 30 January 2023, roughly a 60 percent personal fortune drop at the worst pointcertain
- Adani Enterprises withdrew its fully subscribed 2.5 billion dollar follow-on share offering on 1 February 2023certain
- Adani Enterprises lost more than 18 billion dollars in value on the day the FPO was scrappedlikely
- Hindenburg alleged roughly 38 Mauritius-based shell entities plus additional vehicles in Cyprus, UAE and the Caribbean linked to Adani family associates, an allegation not independently adjudicateduncertain
- Supreme Court of India ruling declining to transfer the probe from SEBI, 3 January 2024certain
- SEBI had concluded 22 of 24 investigation strands into Adani allegations as of early 2024likely
- Hindenburg's allegation against SEBI chairperson Madhabi Puri Buch published 10-11 August 2024certain
Sources
The newsletter
One risk story a week, taken apart the way this one was: what was known, what was ignored, and which quadrant it really belonged to.
No spam, one email a week.