India's Adani Group says its financial status remains unaffected despite “misleading” reports, in its latest rebuttal to a report from Hindenburg Research in January.
The Ahmedabad-based conglomerate has “rebounded strongly since the release of a short-selling report in January 2023", it said in a release on Saturday, without mentioning New York-based Hindenburg.
The Hindenburg report accused the Adani Group of stock manipulation and improper use of offshore tax havens, as well as raising concerns about its high level of debt. Adani Group has vigorously denied all the allegations.
Adani Group's four largest companies – Adani Enterprises, Adani Ports, Adani Green and Adani Power – have all gained more than 100 per cent from their low points in 2023, it said.
Adani Ports, the most widely-held institutional stock in the group's portfolio, and Adani Power are now trading at levels above their price before the Hindenburg report was released, “indicating a lack of trust in these misleading reports”, it said.
Their share prices settled higher at the close of trading in Mumbai on Friday, up 0.9 per cent and 3.3 per cent, respectively. Adani Green added 2.1. per cent, while Adani Enterprises ended the week 1.3 per cent higher.
“The misleading reports on Adani Group, India's largest critical infrastructure developer that has undertaken several projects which are of strategic priorities for the country's development, have been unsuccessful in having any substantial impact on the group's business performance as well as its ability to create shareholder value,” it said.
There had been earlier signs that Adani Group was brushing off the Hindenburg report. In May, it reported that first-quarter net income at its flagship Adani Enterprises surged 138 per cent to 7.22 billion rupees ($88.2 million). Revenue rose 26 per cent to 313.5 billion rupees.
The group's portfolio of listed companies posted earnings before interest, taxes, depreciation and amortisation of 235.3 million rupees, a 42 per cent jump year-on-year.
“Importantly, the Adani Group operates within the bounds of the law and under the scrutiny of regulatory authorities in respective jurisdictions,” it said.
“The allegations are based on false information and only targeted to malign the group's image but have no substantial impact on the group's day-to-day operations.”
Hindenburg's allegations rattled investors, resulting in more than $150 billion being wiped off the conglomerate's market value in the weeks following the report.
Adani Group has repeatedly denied any wrongdoing. It even released a 413-page response to Hindenburg in late January to shoot down the allegations.
The allegations also caused a plunge in chairman Gautam Adani's wealth, resulting in the billionaire losing the title of Asia's richest person.
Although the crisis sparked a political row and shook investor confidence, the group's shares have managed to claw back some of their losses over the past few months but have yet to fully recover. Shares in Adani Enterprises are still down more than 36 per cent year-to-date.
“In addition, the rating agencies have reaffirmed the ratings of all the listed group companies. This has allowed continued market access,” Adani Group's statement said, noting that it was able to raise 179.5 billion rupees from international and domestic banks, as well as capital markets.
“The trust and confidence demonstrated by these investors underscore the strength of the group's businesses and its commitment to high governance standards,” it said.
Adani Group also highlighted investments made by global organisations in recent months, which included $381 million from Abu Dhabi's International Holding Company, the UAE's most valuable holding company.
Other major investors in 2023 include the Qatar Investment Authority and GQG Partners. Adani Group also noted that none of its long-position investors have exited their investments from the group.
These organisations “have continued to support, some through increased participation. This is because the group has been a huge value creator for each of these investors”, Adani Group said.
“Stake sales to these investors have also enhanced liquidity at the promoter level, which can be utilised for strategic priorities. The group has raised nearly $10.5 billion through strategic stake sales to long-only investors.”
The view from The National
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
Iftar programme at the Sheikh Mohammed Centre for Cultural Understanding
Established in 1998, the Sheikh Mohammed Centre for Cultural Understanding was created with a vision to teach residents about the traditions and customs of the UAE. Its motto is ‘open doors, open minds’. All year-round, visitors can sign up for a traditional Emirati breakfast, lunch or dinner meal, as well as a range of walking tours, including ones to sites such as the Jumeirah Mosque or Al Fahidi Historical Neighbourhood.
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High profile Al Shabab attacks
- 2010: A restaurant attack in Kampala Uganda kills 74 people watching a Fifa World Cup final football match.
- 2013: The Westgate shopping mall attack, 62 civilians, five Kenyan soldiers and four gunmen are killed.
- 2014: A series of bombings and shootings across Kenya sees scores of civilians killed.
- 2015: Four gunmen attack Garissa University College in northeastern Kenya and take over 700 students hostage, killing those who identified as Christian; 148 die and 79 more are injured.
- 2016: An attack on a Kenyan military base in El Adde Somalia kills 180 soldiers.
- 2017: A suicide truck bombing outside the Safari Hotel in Mogadishu kills 587 people and destroys several city blocks, making it the deadliest attack by the group and the worst in Somalia’s history.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
