India’s Gautam Adani: Asia’s richest man in the eye of a storm

NEW DELHI (Reuters) – Indian dropout-turned-billionaire Gautam Adani who rose to become Asia’s richest man faces the biggest challenge of his career after a US short-seller questioned his business practices and stock methods. in his companies and his reputation.

Adani, who is native to the western Indian state of Gujarat, built his business empire from scratch after starting out as a commodity trader. Indian Prime Minister Narendra Modi hails from the same state and their relationship has come under intense scrutiny from Modi’s opponents for years.

Adani’s business empire grew rapidly and his wealth swelled. His interests include ports, power generation, airports, mining, edible 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. He is married to dentist Preeti Adani, and has two sons, Karan and Jeet, both of whom work in the firm’s business.

Despite his wealth, the 60-year-old, who comes from a middle-class textile family, was far less famous than other billionaires in a country where many inherit their fortunes.

His business style has been described as “very practical”, according to a person with first-hand knowledge of his dealings.

As Adani’s empire has ballooned, shares of his seven listed companies have soared – in some cases more than 1,500% in the past three years amid a massive expansion. He denied allegations by Modi’s opponents that he benefited from their close ties.

In a 2014 Reuters interview, when asked if he was friends with Modi, Adani said he has friends across the political spectrum, but avoids politics.

Adani said there is no political leader behind his success and when asked about Modi’s use of Adani’s aircraft during the interview, he said that Modi “pays in full”.

In recent years, the Adani Group’s $220 billion empire has attracted foreign investment – France’s TotalEnergies (TTEF.PA)for example, it partnered with Adani last year to develop the world’s largest green hydrogen ecosystem.

Recently, Adani has taken a proactive approach to building his public image, giving interviews to both local and foreign media.

Appearing on a popular Indian TV show this month called “People’s Court,” Adani sat in a mock witness box inside a courtroom and answered questions about his group – providing 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 faced.

Modi’s government denied allegations of favoring Adani.

“People came to know who (Adani) was because of the constant targeting by Rahul ji during the 2014 elections and thereafter,” Adani said during the parade, referring to opposition Congress party leader Rahul Gandhi.

After three weeks, the shares of the companies included in his group fell on Friday, bringing their cumulative losses to $48 billion this week. The short seller Hindenburg Research on Wednesday accused Adani companies of improper use of offshore tax havens and reported concerns about rising debt. Al-Adani called the report baseless and said he was considering taking action.

Reputation challenge

The Adani Group website says its vision is to balance “growth with goodness” as it aims to build assets of national relevance and transform lives through self-reliance and sustainability.

Adani is no stranger to controversies. The most recent was the most famous fishermen’s protest against the construction of a $900m port in the southern Indian state of Kerala, 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.

The final challenge he faces is how to deal with the unprecedented decline in share prices as the flagship company of the Adani Enterprises group (ADEL.NS) It launched the largest public secondary stock offering in the country this week, aiming to raise $2.5 billion.

The share price on Friday fell well below the bid price, casting doubt on its success.

Image expert Dilip Cherian told Reuters that the Hindenburg report and its repercussions may bear on Adani’s reputation, but he may take measures to limit this damage, reassure investors of the strength of the financial group and its assets, and ensure the success of the share sale.

“In terms of the kind of stellar ascent he’s had, this is a risk,” Sherian said.

Adani told India Today TV in December that people who raised questions about the group’s debt had not delved deeply into its financials, without saying who he was referring to.

As the market crisis raged on the Mumbai stock exchanges, Adani was seen heading to 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.

Jefferies says the Adani Group’s total consolidated gross debt is $23.34 billion. While the Hindenburg claimed that Adani’s principal listed companies had “significant debts” which put the entire group on a “precarious financial footing”, the Adani Group has repeatedly said its loans are manageable and no investor has expressed any concerns.

Additional reporting by Shivam Patel, Aditi Shah and Aditya Kalra in New Delhi; Additional reporting by Nikong Ori in New Delhi and Chris Thomas in Bengaluru. Editing by Eileen Hardcastle

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