From 3rd To 15th On Forbes' List Of The Richest People: How Gautam Adani Lost Billions In Just A Few Days?

On Wednesday, Indian businessman Gautam Adani lost his status as Asia’s richest man after the financial loss of his conglomerate’s largest firms increased to $84 billion due to reports of short selling.

Simply explained, short selling is a circumstance in which traders borrow shares from the owner on a regular basis and sell them in expectation of a price drop, then purchase them back at a lower price and return them to the owner, retaining the difference.

Until recently, the world’s third richest man had been unable to persuade investors that the accusations of the American firm Hindenburg Research regarding major issues in his firm’s financial processes were unfounded.

According to Reuters, the value of Gautam Adani’s enterprises fell by about 70 billion dollars in only three days.

As a result, according to Bloomberg’s index of billionaires, this Indian has dropped from third position, with assets totaling 92.7 billion dollars.

WHO IS GAUTAM ADANI?

Until recently, few outside of India had heard of Gautam Adani. This Indian businessman dropped out of college and worked as a diamond merchant before turning to coal.

Gautam Adani was born in 1962. His father was a textile dealer, but Adani became dissatisfied with the industry and began working as a diamond sorter. Then, in 1981, he and his elder brother began importing primary polymers (plastics) for small enterprises.

Their business expanded, and Adani established Adani Exports Limited, which dealt with metals, textiles, and agricultural products. Adani’s empire skyrocketed after he was awarded the contract to India’s largest seaport, Mundra, in 1995.

This is the first time an Asian has cracked the top three slots on the Bloomberg Billionaires Index; Mukesh Ambani and China’s Jack Ma have never made it that far. With a wealth of $137.4 billion, Adani has surpassed Frenchman Bernard Arnault and until recently was behind only Americans Elon Musk and Jeff Bezos.

Adani has spent the last five years growing his conglomerate, diversifying into industries ranging from data centers to cement, media, and alumina. The business currently controls India’s largest private sector port and airport operator, as well as a city gas distributor and a coal miner.

While environmentalists opposed his Carmichael project in Australia, he committed in November to invest $70 billion in renewable energy to become the world’s greatest generator.

The transition to green energy and infrastructure has attracted investment from firms such as Warburg Pincus and TotalEnergies SE, allowing Adani to penetrate strata traditionally held by US tech titans. The current jump in coal prices has propelled its ascent even more.

Adani increased its fortune by $60.9 billion in 2022 alone, five times more than anybody else. He surpassed Ambani as the richest Asian in February, became a billionaire in April, and surpassed Microsoft’s Bill Gates as the world’s fourth-richest man.

Adani has been able to surpass some of the world’s wealthiest Americans, in part because they donate a lot of money.

FROM SUDDEN SUCCESS TO LOSS OF BILLIONS

Gautam Adani, the Adani Group’s founder, and chairman has amassed a net worth of approximately $120 billion, adding more than $100 billion over the last three years primarily through rising share prices in the group’s seven core listed companies, which have risen an average of 819% over that period.

The firm’s opening disclaimer is crucial: “After considerable investigation, we have acquired a short position in Adani Group Companies through US-traded bonds and non-traded derivatives in India.”

Hindenburg Investigation, which claims to specialize in forensic financial research on its website, launched the financial loss that happened to Adani.

“We have decades of expertise in the investment management sector, with a historical concentration on equities, credit, and derivatives analysis,” they say.

Hindenburg released the conclusions of a “two-year investigation, showing evidence that Indian giant Adani Group, valued at 17.8 trillion Indian rupees (US$218 billion), participated in blatant stock manipulation and an accounting fraud scheme over a decade” on January 24.

After many days of tumultuous trading, the Group’s shares dropped on Wednesday, with Adani Enterprises shares down at least 25% on Wednesday afternoon.

Adani Port and Special Economic Zone lost almost 20% of its value, Adani Green Energy lost more than 5%, Adani Total Gas lost 10%, and Adani Transmission lost 3%.

According to Reuters, the stock market dropped $84 billion as a result of the statement.

According to Forbes, Gautam Adani has lost the title of Asia’s richest man to Mukesh Ambani, the chairman of Reliance Industries.

ADANI GROUP’S RESPONSE