The US investor targeting Indian conglomerate Adani Group over what it claims is the “biggest con in corporate history” has dared the company to sue, given it would open the coal producer to further scrutiny.
Hindenburg Research’s report has already wiped billions of dollars of value from the sprawling empire of Gautam Adani, the world’s third richest man, and drawn in the contentious Carmichael coal and rail project in Queensland.
Hindenburg said in a statement that Adani had not responded to any of the substantive issues raised in its report that accused the company of engaging in a “brazen stock manipulation and accounting fraud scheme”.
“Instead, as expected, Adani has resorted to bluster and threats,” the statement said.
“Regarding the company’s threats of legal action, to be clear, we would welcome it. We fully stand by our report and believe any legal action taken against us would be meritless.
“We have a long list of documents we would demand in a legal discovery process.”
Activist investors like Hindenburg typically take a short position in a listed company they believe is heavily overvalued and has poor or fraudulent business practices.
Founded by Nate Anderson, Hindenburg is a US activist fund named after the 1937 airship disaster that looks for stocks that could crash. It has accused Adani of loading companies with debt that puts the entire group on a “precarious financial footing”.
The battle comes amid a large scheduled fundraising attempt by Adani Enterprises, the company’s listed flagship, in which Adani is seeking US$2.5bn from investors to fund capital expenditure and reduce debt.
Adani has threatened to seek “remedial and punitive” action against Hindenburg over what it said was a “maliciously mischievous, unresearched report”.
“Clearly, the report and its unsubstantiated contents were designed to have a deleterious effect on the share values of Adani Group companies as Hindenburg Research, by their own admission, is positioned to benefit from a slide in Adani shares,” Adani Group’s legal head Jatin Jalundhwala said in a statement on Thursday.
The statement said Adani was disturbed by the “intentional and reckless attempt” of a foreign entity to mislead investors and the general public and sabotage the public offering.
Adani has previously said that allegations in the report had been discredited and rejected by India’s highest courts, and that Hindenburg had not attempted to verify information with the company before publishing.
The Hindenburg report cited a series of transactions tied to Adani’s Australian operations that it alleged may have allowed Adani to avoid disclosing large asset impairments to investors.
Located in Queensland’s coal-rich Galilee Basin, the Adani project exported its first coal in late 2021, drawing opposition due to the fossil fuel’s contribution to greenhouse gas emissions.
That project went ahead after the Queensland government struck a royalties deal with the miner that allowed it to defer payments, although the full details of the agreement have not been made public.
The Queensland government’s resources department said media questions about the report should be directed to financial regulators.
The Australian Securities and Investments Commission, which declined to comment, would typically assess the report to determine if it should investigate.
The Greens industry spokesperson, Penny Allman-Payne, said the Hindenburg report raised concerns over Adani’s actions, prompting questions over its right to operate in Australia.
“This should give Queensland Labor serious pause about its reckless and misguided decision to get into bed with Adani, and should call into question the company’s future in Australia,” Allman-Payne said.
More than US$9.4bn (A$13.2bn) in value was wiped off listed companies in the Adani network on Wednesday after the Hindenburg report was published. Those same companies fell further in early trading on Friday, after Indian markets were shut on Thursday, creating selling momentum.
The billionaire US investor Bill Ackman said in a tweet he found the Hindenburg report to be “highly credible and extremely well researched”. He acknowledged the hedge fund he leads, Pershing Square, had not done any independent research into Adani.