The Adani Group Scandal, in a Nutshell
In 1937, the largest rigid airship in the world, known as LZ 129 Hindenburg, was about to finish its transatlantic voyage when its buoyant hydrogen caught fire and crashed spectacularly.
The infamous short-seller Hindenburg Research no doubt borrows its name and business model from that airship, because when it targets a company, as it did with India’s Adani Group last month, crash and burn is the result, taking with it the country’s climate ambitions.
Background: The Adani Group is a sprawling multinational conglomerate founded in 1988 by Gautam Adani, and one of the prominent developers in India.
The company’s president grew up in the same region as India’s current prime minister, Narendra Modi. Working together, Adani Group companies helped India build up a vast number of infrastructure projects, including power, renewable energy, transmission, ports, and more.
- Think of it like how the US government leveraged the robber barons like JP Morgan and John D Rockefeller to industrialize America.
Enter Hindenburg Research to light the match
The short-seller released a massive 400-page document last month outlining what it described as a sprawling accounting fraud and stock price manipulation scheme. This led investors to panic and sell off, causing the Adani Group to lose up to $110 billion in value.
- Guatam Adani, previously one of the wealthiest people on Earth, lost $60 billion, or roughly half his wealth, in just one week.
The response: The Adani Group fired back, denying the allegations and accusing the report of being an attack against India.
- It’s currently unknown whether the fraud allegations are true or not, but while claiming the report is an attack on India sounds a lil defensive, the report will undoubtedly hurt India.
India’s official climate target is to reduce its emissions intensity to 45 percent of 2005 levels by 2030. To do this will largely require the help of the Adani Group and willing investors in India. This scandal, should it prove to be true, will make India’s energy transition infrastructure and projects much more challenging to get done.
- TotalEnergies already announced it’s putting a $4 billion hydrogen investment with Adani on hold, and this may just be the beginning.
Bottom line: There’s nothing quite as spectacular as a billionaire inferno. In this case, though, Hindenburg’s huge pay day from Adani’s downfall may also come with quite a cost.