The Adani Group’s ravenous thirst for debt has been exploited by international investment banks. Currently, their client is charged with committing “the biggest fraud in business history.”
After the Adani Group successfully acquired a cement company from Swiss company Holcim for $10.5 billion last summer, Gautam Adani, the conglomerate’s founder and the fifth-richest man in the world at the time, showed off to the Economic Times that his “relationship banks” — Barclays, Deutsche Bank, and Standard Chartered Bank — had “fully funded” the transaction.
Following the release of the explosive 32,000-word study from short-seller Hindenburg Research, which asserts that the Adani Group and its headliners have been involved in a years-long fraud and stock market manipulation scheme, such connections may come under strain. (The Adani Group claims it is assessing legal action against the acquisition business but denies any wrongdoing.)
As per the financial market data source Refinitiv, six distinct Adani Group firms raised roughly $10 billion between 2015 and 2021 through the sale of US dollar-denominated bonds that were backed by US and European investment banks. 14 of these 18 bond issuances—or a total of 18—took place in May 2019 and September 2021. Half of the debt was raised by one of these businesses, Adani Ports & Special Economic Zone, which benefits from its favorable status.
The debt issued in rupees and other currencies by the Adani Group is not included in these numbers. As of March 2022, the conglomerate has over $27 billion in unpaid liabilities. About 40% of the debt that Adani companies issued between 2020 and 2022 was financed by the State Bank of India.
The core of Hindenburg Research’s charges of fraud is leverage. According to Hindenburg, the Adani Group corporations and Adani-owned offshore shell companies lend money to one another to launder money and falsify their financial records. Hindenburg focused on several loans between Adani entities, including a $253 million loan from a Mauritius-based shell company to a confidential Adani-owned commodity, which then lent approx $138 million to Adani Enterprises, a publicly exchanged company. This loan appears to be controlled by Gautam Adani’s brother, Vinod Adani. Another case included the mysterious $1 billion loan to Mahan Energen, an affiliate of Adani Power, by Arising Market Investment DMCC, a company situated in the United Arab Emirates with hardly any web presence.
According to Pablo Brait, a campaigner with the Australian environmental finance group Market Forces, “Adani’s involvement in enormous new thermal coal mines in the profoundness of the climate problem hasn’t been enough to convince some major banks, such as Deutsche Bank, Standard Chartered, and Barclays to cut ties.” Hopefully, these serious claims will cause all banks to finally see the dangers of financing Adani.
How Adani will be in the coming months is yet unknown. Regarding their connections to the Adani Group, Barclays, Deutsche Bank, JP Morgan, and Bank of America all refused to comment. Due to client confidentiality, Standard Chartered Bank stated that it does not discuss client relationships. Furthermore, Credit Suisse was still silent at the time of the journal.