He started the year as the fourth richest man in the world.
For 24 days he took advantage of this symbolic title as one of the most powerful people. He was also the richest man in Asia.
But suddenly the machine went off the rails.
Everything has been going wrong for the Indian billionaire Gautam Adani, 60. His fortune, estimated at $119 billion on Jan. 24, is melting at a worrying speed. It is estimated at $59 billion as of Feb. 5, according to the Bloomberg Billionaires Index. In total Adani lost $60 billion in 2 weeks.
Adani Falls Out of the Top 20
He has been ejected from the top 20 billionaires. He is currently 21st, but it would not be surprising if his slide continued in the coming days.
What happened? How did the man who had a meteorite rise in the past two years -- to the point of last September becoming the world's second richest man -- find himself so weakened?
It all started on Jan. 24, when the New York investment firm Hindenburg Research published a scathing report on the Adani conglomerate after shorting stocks of the group through U.S.-traded bonds and non-Indian-traded derivatives. This meant that the New York-based investment firm, a well-known short-seller, was betting on a short-term drop in the prices of these equities.
The short-seller claims that the conglomerate has used shell companies in tax havens to boost its revenue and manipulate the stock prices of its various entities. The report describes a galaxy of shell entities based in the Caribbean, Mauritius and the United Arab Emirates controlled by the Adani family.
"We have uncovered evidence of brazen accounting fraud, stock manipulation and money laundering at Adani, taking place over the course of decades," Hindenburg wrote.
"Adani has pulled off this gargantuan feat with the help of enablers in government and a cottage industry of international companies that facilitate these activities," Hindenburg said.
Adani Group, which holds mines, ports, power plants and data centers in India, has rejected the allegations as baseless and has threatened to pursue all possible legal remedies in Indian courts.
"This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India," Adani Group said, in a 413-page report, on Jan. 29.
Credit-Rating Companies Send Warnings
But investors' confidence in the group has dissipated. Investors wonder about the group's enormous debt and the governance problems Hindenburg raised. The silence of the government of Prime Minister Narendra Modi, to whom Adani is close, does not help either and contributes to maintaining the feverishness.
The credit-rating company S&P Global Ratings has just lowered the outlook for certain entities of the Adani Group due to concern about their ability to finance themselves in coming months.
On Feb. 3 S&P lowered the rating outlook for Adani Ports & Special Economic Zone and Adani Electricity Mumbai to negative from stable.
"There is a risk that investor concerns about the group’s governance and disclosures are larger than we have currently factored into our ratings,” analysts Mary Anne Low and Chang Jia wrote in a note. "Or that new investigations and negative market sentiment may lead to increased cost of capital and reduce funding access for rated entities.”
Moody's Investors Service is also questioning Adani's ability to raise funds and refinance its debt in the coming years.
The two rating companies left the conglomerate's financial-strength rating untouched, but S&P made clear that it might downgrade it in the short term, which would be a big blow for Adani Group.
Gautam Adani became a billionaire in 2008 after starting a commodity export firm. But his real rise came during the covid-19 pandemic.
Last year, he overtook, one after another, the regulars of the rankings of big fortunes like Warren Buffett and Bill Gates. He managed to dethrone Jeff Bezos from second place. The only person whose fortune had staved off Adani's rise had been Elon Musk, who clung to the title of the richest man in the world.
