Indian billionaire Gautam Adani lost more than $20 billion (£16 billion) on Friday when investors left his companies for a second day because a US investment firm said they were scams. The claims caused investors to flee his companies.
The Adani Group has stated that the report is intentionally misleading, but their response has not been successful in calming the widespread outrage.
The most prominent political party in India’s opposition has called for an investigation.
About $50 billion is missing from the market value of the company’s publicly traded subsidiaries.
On Friday, shares of the company’s flagship Adani Enterprises fell by nearly 20%, while shares of some of the group’s other publicly listed firms fell even further, leading to the automatic halting of trading in Mumbai.
According to the publication Forbes, Mr. Adani has fallen from the position of the third richest person in the world to the position of seventh on the rich list. The publication estimates that Mr. Adani has a net worth of more than $96 billion.
The fallout comes just a few days after Hindenburg Research, a company that specializes in “short-selling,” or betting against a company’s share price in the hope that it will fall, released a report accusing the Adani Group of decades of “brazen” stock manipulation and accounting fraud. The report was published after Hindenburg Research accused the Adani Group of engaging in “short-selling,” or betting against a company’s share price in the expectation that it will fall.
Its report was released in advance of Adani Enterprises’ planned share sale, which is currently experiencing low levels of demand.
Mr. Adani is a self-made tycoon who built his fortune through investments in a variety of industries, including ports and airports, renewable energy, and other businesses. The value of the shares that he owns in his companies has skyrocketed over the past three years, which has led to a significant increase in his wealth.
His company stated that it was weighing the possibility of taking legal action against Hindenburg.
Mr. Adani, who is an ally of Indian Prime Minister Narendra Modi, has been challenged for a long time by politicians from the opposition who allege that he has benefited from his political ties. Mr. Adani has consistently denied these allegations.
Companies affiliated with the Adani Group have received billions of dollars in funding from a variety of Indian banks and state-owned insurance firms in the form of either investments or loans.
Reuters talked to several of India’s largest public sector banks, and they all said that they were not worried about the risks that could come from doing business with the company.
However, the wider stock market has been impacted by the event, which contributed to the decline of more than one percent on India’s benchmark Nifty 50 stock index on Friday.