“We have identified 38 Mauritius shell entities controlled by Vinod Adani or close associates. We have identified entities that are also surreptitiously controlled by Vinod Adani in Cyprus, the UAE, Singapore, and several Caribbean Islands,” the report said, referring to Gautam Adani’s elder brother Vinod Adani.

“Many of the Vinod Adani-associated entities have no obvious signs of operations, including no reported employees, no independent addresses or phone numbers and no meaningful online presence. Despite this, they have collectively moved billions of dollars into Indian Adani publicly listed and private entities, often without required disclosure of the related party nature of the deals,” the report said.

Earlier, the financial research firm’s allegations of “intricate fraud” at the US-based electric truck maker Nikola Corporation in 2020 led to its former executive chairman Trevor Milton’s ouster.

Hindenburg’s two-year investigation has now shown that more than $100 billion was added to Gautam Adani’s net worth in the past three years largely due to an 800% rise in stock prices during this period.

“The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts,” Jugeshinder Singh, the Adani Group’s chief financial officer said in a statement, in response to the Hindenburg report.

Shares of Adani Group’s seven listed entities plunged by up to 10% on Indian stock markets on Jan. 25. The massive selloff has led the company to lose $24.5 billion in market capitalization so far, according to the latest data on BSE.

Later, in another statement, the Adani Group said, “We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research.”

Adani is one of India’s biggest business groups and is often deemed one that cannot be allowed to fail. The huge debt pile in its portfolio has been a matter of concern. In the financial year that ended in March 2022, its gross debt rose 40% to $26.9 billion, from $19.2 billion a year ago.

The group’s collapse would wreak havoc on not just India’s equity markets, but also retail investors since several public sector banks and India’s biggest insurer Life Insurance Corporation have indirect exposure to it. A major chunk of the Indian taxpayer’s money is held by these government-run entities.

Hindenburg takes short position in Adani

Hindenburg Research also said it had taken a short position in the group through its US-traded bonds and Indian-listed derivatives, which means the firm expects a correction in overleveraged Adani stocks.

“Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its seven key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations,” the report said.

It comes at a time when Adani Enterprises, the group’s holding company that is also listed separately, is planning to raise $2.5 billion through a follow-on public offer (FPO) this week. It is being touted as the largest FPO in Indian history.

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