So far in the story of Adani Hindenburg, you have seen how India's famous business tycoon Gautam Adani,
who once was the 2nd richest person in the world, above the growth of him and his companies Hindenburg came as the black clouds in the sky.
A report by Hindenburg started a bloodbath in the shares of Adani and his group companies.
After this, whether it is Adani canceling the fully subscribed FPO, the bond prices of Adani group companies crashing, or big banks
like Credit Suisse and Citigroup not accepting Adani companies' bonds as collateral for loans, the problems for the Adani Group had only begun.
In the last video, we told you how Adani Group had received margin calls from some of its lenders for loans against or you can say warning calls.
Due to this, he had also prepaid a loan of $ 1.1 billion.
On 9 Feb 2023, the leading index provider Morgan Stanley Capital International ie MSCI said that
the weightage of 4 Adani shares in their indices would be reduced.
These 4 companies are his flagship company Adani Enterprises, Adani Total Gas, Adani Transmission, and ACC Limited.
So amid so many problems, Adani Group would hardly have taken a peaceful breath for a moment or two that in 2-3 days again,
new players are being picked up in this whole Adani episode.
You probably have guessed it.
I am talking about a recently published Forbes report, which has leveled allegations against Gautam Adani's elder brother, Vinod Adani.
If you have followed the Adani-Hindenburg Saga, then you cannot be unaware of this name.
The name of his brother Vinod Adani will appear more times in the Hindenburg Report than that of Gautam Adani.
As per the Hindenburg report, several transactions of the Adani group involve offshore shell companies operating in tax-haven countries.
And these shell companies are somehow related to the Adani Group or the Adani family.
Hindenburg had put allegations on Gautam Adani's elder brother Vinod Adani of managing the network of these offshore companies.
Now Forbes in its article says that a private Singaporean entity controlled by Vinod Adani took a loan of $240 million from a Russian bank
by pledging Adani promoters' stakes, and the Adani group didn't disclose anything about it.
Hindenburg also tweeted about this article as soon as this article was published.
It has also been written in the Forbes report that Singapore-based Pinnacle Trade and Investment, indirectly controlled by Vinod Adani,
had entered into a loan agreement with a Russian bank.
Pinnacle had borrowed $263 million from the bank as of April 2021, and at the same time had also lent $258 million to an unnamed party.
For this loan, they have 2 guarantors namely Afro-Asia Trade & Investments Ltd and Worldwide Emerging Market Holdings Ltd.
Interestingly, Vinod Adani owns another fund i.e. Worldwide Emerging Market Holdings.
Both entities hold shares worth about $4 billion in Adani Group companies as per market closing prices on February 16.
Another event was mentioned by Forbes to establish the link between Vinod Adani and Adani companies.
It was last year when Endeavor Trade and Investment Ltd, a company of Vinod Adani,
served as the investment vehicle of the Adani Group to buy a stake in Ambuja Cements Ltd and ACC Ltd from Holcim.
And this is mentioned in the public filing of Ambuja Cements.
Going a little further back, Vinod Adani's name has also figured in Panama and Pandora Papers,
which alleges that he operates offshore companies in the Bahamas and the British Virgin Islands.
Apart from this, Vinod Adani has also been exposed to stock manipulation with the help of these offshore companies.
Through various such events, Vinod Adani's history in the Forbes report, and his links to Adani Group companies, have been covered in detail.
Perhaps they want to bring to light the clear links between the Adani Group and Vinod Adani.
If you are interested in reading the full report, we have added the link to the report in the description of this video for your reference.
Well, it is said that when troubles come, they come from all sides.
So something similar is happening with the Adani Group.
Nowadays there is a lot of focus on such companies which follow ESG i.e. Environmental, Social, and Governance standards.
One company of Adani Group that brings in ESG parameters is Adani Green Energy Limited, which owns its renewable energy business.
Now many funds around the world invest in companies based on ESG parameters.
These funds get an ESG mandate by which they make capital investments to be an active part of green energy worldwide expansion.
In such a situation, many global funds have been funding renewable energy projects of Adani Green to meet their ESG mandates.
These funds can come in the form of equity or debt.
This enables businesses like Adani Green to get cheap funds and efficiently finance their huge capex requirements.
Since the Hindenburg report came out, there is a lot of scrutiny on the loans of Adani Group and the shares pledged by them.
And when all the financial arrangements of the Adani Group conglomerate were reviewed, the ESG markets were also alarmed.
I will explain in detail.
See, Adani Green works in the business of renewable energy. And that is why ESG-focused funds invest it in.
But Adani Enterprises, the flagship company of the Adani Group, is still heavily dependent on mining and trading mainly of coal and iron ore.
Now you must be thinking that it is okay, both are different companies, and both have their own separate business, so is the problem?
It is right to some extent, but the problem comes when there is a public filing on February 10, in which it is written that
Adani Enterprises raised funds by keeping Adani Green shares as collateral,
and those funds are used for their Carmichael coal mine project in Australia.
And this news spread like a fire in the ESG market.
The result was that KLP, Norway's largest pension fund, dumped its entire stake in Adani Green.
KLP takes ESG principles very seriously.
As you can see on your screen, there are 6 key ESG principles.
When they came to know that Adani Green shares have been used to build coal mines in Australia,
they felt that their funds are indirectly financing the polluting activities.
Hence, KLP divested its entire holding in Adani Green in one stroke.
Apart from this, several other organizations have downgraded Adani Green's ESG Score.
Sustainalytics has downgraded the ESG score of many Adani companies.
S&P Global has said that it is pulling Adani Enterprises out of its Dow Jones Sustainability Index.
Well, so far we have only discussed financial and corporate issues.
The Adani issue has now taken a political side as well which is adding fuel to the fire.
And this person is playing a central role in this episode:
George Soros.
After this statement, everyone is talking about him.
George Soros is a 92-year-old billionaire who shifted to New York in 1956 and then started his hedge fund there.
Soros' rise was cemented by his short positions against the British pound.
His risky bet made 1 billion dollars in one day, after which people also recognized him as "The Man Who Broke the Bank of England".
With a net worth of $8.5 billion, Soros is always in front of political activism through his Open Society Foundation.
Soros in his speech at the Munich Security Conference criticized PM Shri Narendra Modi over his perceived’ ties with the crisis-hit Adani.
Not only this, but he also told that the allegations against Adani will push the beginning of a democratic revival in India.
It was obvious. India's response against these remarks was bound to come.
Soon after Soros' tearful speech on 'democratic revival' in India, the ruling Bharatiya Janata Party called its press conference.
Central Cabinet Minister Smt. Smriti Irani launched an aggressive attack on Soros, giving a message to Indians to unite in large numbers.
External Affairs Minister Shri. S Jaishankar sitting in Sydney also answered the question asked on Soros vs India in his unique way.
Calling Soros "old, rich, opinionated and dangerous",
Jaishankar took a clear hit at him, saying foreign interference in India's domestic politics undermines our vibrant and functioning democracy.
By the way, I also tell two more important facts about George Soros.
The way he shorted the weak pound, in the same way, during the Asian financial crisis, he shorted Asian currencies like the Malaysian Ringgit and the Thai Baht.
The former PM of Malaysia claimed that due to Soros's 'speculation', the Malaysian economy had collapsed, impacting the common people.
And perhaps this is why Soros is also called an "economic war criminal".
In addition, there are also allegations of regime change in Indonesia and the Middle East with the help of their financial and political influence!
One thing is certain among all these – Adani is down! But is he really out? Maybe not, because Adani Group is preparing for its comeback.
Gautam Adani has hired top-shelf US-based crisis communication and legal teams to scrap a planned $850 million coal plant purchase,
tightened expenses repaid some debt, and also promised to repay some more debt.
For corporates, especially those that are listed, perception matters a lot.
And obviously, if Adani is to claw back its position and regain investor confidence, perception management can play a big role in that.
That's why Adani Group has also hired public relations firm Kekst CNC, which will play the role of a global communication advisor for them.
Kekst CNC has had many high-profile clients such as WeWork.
In the last video, Adani Group hired American Law Firm - Wachtell, Lipton, Rosen & Katz ie WLRK to fight the claims of Hindenburg.
Wachtell, the most expensive law firm in the US, has defended its clients from stock market activists in the past as well.
A fun fact- Twitter also hired Wachtel in 2022 when it wanted to sue Elon Musk to force Musk to complete the Twitter acquisition.
Now if we discuss their financial moves, recently the top management of Adani has assured its bondholders in a conference call that
their "Net Debt to EBITDA" will come to 3 times in the next 3 years from the current ratio of 3.20.
That's why Adani is also focusing on repaying the loan.
For eg, the Adani Ports and Logistics division announced on Feb 8 that it would pay off about 50 billion rupees in debt in this fiscal year.
Besides this, in recent earnings filings, Adani-owned Ambuja Cements and Adani Green Energy
have also announced plans to hire independent firms to investigate their regulatory compliance and related party transactions.
But will these steps be enough for Adani Group?
Perhaps Adani will have to take more steps to win back the confidence of investors, and this will take a long time.
Now Adani Group companies might have to withdraw from their growth accelerator and do their next phase of expansion slowly and steadily.
The issue which started as a financial and corporate scam has now become political.
By the way, Soros had also said one more thing that due to the Adani controversy, the confidence of foreign investors in India has been shaken.
Now was this a politically calculated statement, or reflecting the reality?
Well, the situation is very dynamic and there is no better fact-checker than time.
What do you think, will Gautam Adani's Adani Group be able to make a comeback?
Have you invested in any of the Adani Group companies? Do tell in the comment section.
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