At the end of January, the American investment research company Hindenburg Research published a 106-page investigation into the Adani Group conglomerate, owned by one of the world’s richest men, Gautam Adani. The investigation mentions 151 times the elder brother of the Indian billionaire Vinod Adani, who is the main link in the global network of offshore companies associated with the Adani Group. What is known about Vinod Adani and what is his role in the conglomerate – in the material Forbes USA
In late January, US bear trading firm Hindenburg Research published an extensive report, in which he accuses Adani Group of financial fraud and securities manipulation. The name of Gautam Adani, a 60-year-old Indian billionaire and president of the conglomerate, is mentioned 54 times in the document. The company calls all charges “unreasonable”. Vinod Adani, the lesser-known older brother of the president of the Adani Group, is mentioned 151 times, the most.
According to a report by Hindenburg Research, Vinod “manages a vast maze of offshore shell companies” that “collectively transfer billions of dollars to Adani’s public and private ventures in India, often bypassing mandatory disclosure of the nature of the transaction involving affiliated parties.” This, in turn, helped Adani Group not comply with Indian legislation requiring third parties to own at least 25% of the share capital in listed companies.
The Adani Group denies inconvenient ties with the brother of the president of the corporation. “Vinod Adani does not hold any management positions in any of the listed Adani Group entities or subsidiaries and is not involved in their operations,” the company countered in its 413-page answer representatives of Hindenburg Research, published on January 29, 2023. The conglomerate also added that the Adani Group has “appropriately identified and disclosed” all transactions involving affiliates.
However, Forbes discovered previously unknown transactions that were conducted through offshore funds associated with Vinod Adani and, apparently, created specifically for the needs of the Adani Group. Operations on these transactions once again confirm Hindenburg Research’s statements about hidden mechanisms and inconsistencies in the conglomerate’s accounting department.
“I always thought they were partners,” said Tim Buckley, director of the Australian analyst firm Climate Energy Finance, who has studied the Adani Group and its plans to develop a coalfield in Australia. “Gautam was a friendly, endearing public figure, and Vinod was a behind-the-scenes gray eminence in the area of taxation, a real puppeteer.”
Neither the Adani Group nor Vinod Adani responded to a request for comment. The latter’s email address, linked to several properties in Dubai, is located in the Adani Global domain zone.
Some of Vinod’s interactions with the Adani Group are in plain sight. Last summer, one of Vinod’s ventures, Endeavor Trade and Investment, acted as an intermediary for the Adani Group in buying shares in Indian cement producers Ambuja Cements and ACC Limited from the Swiss firm Holcim for $10.5 billion – this is stated in open Ambuja Cements documents. Thanks to the acquired securities, Adani Group has become the second largest cement manufacturer in India.
Other operations are not so obvious. Take, for example, Pinnacle Trade and Investment, a Singaporean company indirectly owned by Vinod. In 2020, the firm entered into a loan agreement with the state-owned Russian bank VTB (it was sanctioned by the US last year). By April 2021, Pinnacle Trade and Investment had taken out a $263 million loan and issued a $258 loan to an unnamed affiliate. A few months later, the firm appointed two investment funds, Afro Asia Trade and Investments and Worldwide Emerging Market Holding Ltd, as guarantors for the loan, according to Singapore documents. Vinod, apparently, is the owner of the second: in Indian stock documents June 2020 And August 2022 years, it is indicated that he is the ultimate beneficial owner of Acropolis Trade and Investments Ltd in Mauritius, and she in turn holds 100% of the capital of Worldwide Emerging Market Holding Ltd.
Both Afro Asia Trade and Investments and Worldwide Emerging Market Holding Ltd. are major shareholders of the Adani Group. As of the close of trading on Feb. 16, these funds held $4 billion worth of shares in Adani Enterprises, Adani Transmission, Adani Ports and Adani Power – all firms recognize the funds as “auxiliary” entities.
According to Trendlyne online investment counter, no other securities held by Afro Asia Trade and Investments and Worldwide Emerging Market Holding Ltd. No. This means that the Pinnacle Trade and Investment loan is essentially collateralized by the value of Adani Group shares. None of the funds in the Indian exchange documents does not specify the amount of pledge of shares of the four Adani companies in which the funds are invested.
“It’s almost like taking out a loan with funds invested in some Adani businesses and then lending to other Adani businesses,” explains one Indian stock expert who read Forbes’s find and asked not to be named in light of the alleged investigations against Adani Group by the Securities and Exchange Board of India. IN statement to the Supreme Court of Indiawhich Reuters reported last Monday, the regulator says it is “investigating both the content of the Hindenburg Research report and market activity immediately before and after the report’s release.”
By pledging investment funds rather than Adani Group shares as collateral, Pinnacle Trade and Investment may have absolved itself of the obligation to disclose equity capital raised, the Indian stock expert adds. When asked by Forbes to comment on the material, neither Pinnacle Trade and Investment, nor Afro Asia Trade and Investments, nor Worldwide Emerging Market Holding Ltd. didn’t answer.
While Gautam is the public face of the Adani empire, Vinod prefers to keep a low profile. Vinod has a Cypriot passport, resides in Singapore and uses several names, including introducing himself as Vinod Shantilal Shah. The man’s date of birth is unknown.
The only obvious fact of Vinod’s biography is his status as a billionaire. Forbes estimates he is worth at least $1.3 billion, based on his holdings in Worldwide Emerging Market Holding Ltd. and Endeavor Trade and Investment, which owns stakes in family-owned cement companies Ambuja Cements and ACC Limited (excluding equity loans in the latter two). When it turned out that several businesses previously thought to be Gautam’s property were actually owned by Vinod, Forbes reduced Gautam Adani’s estimated net worth to $50.7 billion.
IA “RBC”, 01.02.2023, “Billionaire Adani was stripped of the title of the richest man in Asia”: Indian businessman Gautam Adani has been stripped of the title of Asia’s richest man by Forbes after a sell-off in the largest companies in the Adani Group conglomerate drastically reduced his fortune. On Wednesday, February 1, Gautam Adani dropped to 15th place in the Forbes real-time ranking of billionaires, the magazine experts now estimate his net worth at $ 75.1 billion. […] On January 31, Forbes estimated Adani’s fortune at $ 89.1 billion, in the rating of the magazine’s billionaires, he then ranked eighth.
Bloomberg experts on the last day of January excluded Adani from the top ten billionaires in the world. And on February 1, Bloomberg announced that Mukesh Ambani had beaten a losing opponent in the race for the title of Asia’s richest man. Adani is now worth $72 billion, while Ambani is now worth $81 billion, according to new Bloomberg figures. Adani lost $36 billion in January, more than any other billionaire, Bloomberg estimates.
Shares of companies belonging to the Adani Group conglomerate fell significantly after five days of sales provoked by the publication of a report by the American company Hindenburg Research. According to Reuters estimates, the capitalization of the holding companies decreased by a total of $ 84 billion. Prior to the publication of the Hindenburg Research report, Gautam Adani was ranked third in the list of the richest people in the world according to Forbes. — Inset K.ru
However, it is very difficult to clearly separate Vinod’s personal wealth from Gautam’s finances, and the older brother may be much richer. Vinod also owns 10 properties in Dubai, according to real estate data from the Washington DC-based nonprofit Center for Advanced Defense Studies. He also has an apartment in Singapore (registered in his name in the Pinnacle Trade and Investment documents) worth about $4 million. , Virgin Islands, Cayman Islands, Mauritius, Singapore and the United Arab Emirates.
Vinod has lived abroad for at least 30 years. According to sponsored editorial article in the Indian newspaper The Economic Times, he received a master’s degree in engineering from the United States and then opened a textile business in Mumbai in 1976. In the 1980s, Vinod purchased a small plastic packaging factory for $1,000 using his own savings and a bank loan, and brought in his younger brother Gautam to run it. “We started almost from scratch,” Gautam told Forbes in 2009.
By 1989, Vinod had expanded the company’s business into industrial goods trading, set up a new office in Singapore, and subsequently moved there himself. In 1994, the entrepreneur moved to Dubai, where he began trading in sugar, oil and metals – the business already covered Dubai, Singapore and the Indonesian capital Jakarta.
Then the businessman began to build an empire of offshore organizations. According to information from Panama Papers leaks from the International Consortium of Investigative Journalists (ICIJ), in January 1994, Vinod founded the company in the Bahamas. Two months later, he also asked to change his name on corporate documents from Vinod Shantilal Adani to Vinod Shantilal Shah.
While Vinod was actively developing business in Dubai, Gautam began his own career: in 1988 he established an enterprise, later called the Adani Group, and in 1994 brought it to the stock market. Throughout all these years, Vinod has been closely involved in the affairs of his brother. The Hindenburg Research report notes that he held various positions in Adani Group companies until at least 2011. In addition, Vinod’s 44-year-old son, Pranav, is the managing director at Adani Enterprises to this day.
In 2014, a scandal erupted due to the fact that the Adani Group was allegedly overbilled for equipment for a power plant in the amount of approximately $ 800 million. At that time, the General Revenue Office of India accused Vinod of having, along with employees of the Adani Group, “carried out a planned conspiracy to withdrawal of foreign currency abroad. At first, the case was rejected, but then an appeal was filed on it, and the claim is still pending consideration in the customs authorities of the country. The Adani Group denies any wrongdoing.
“In a family business, it’s all the same: there’s a big brother and a little brother,” says Vikramaditya Khanna, law professor at the University of Michigan and co-director of the Joint Center for Global Corporate and Financial Governance, established by the law schools of the University of Michigan and Jindal Global University. “Part of it is the person. What industry is he comfortable working in and what skills does he have? Some like to be in the sun, some prefer to stay in the shade.”
Through other transactions since 2012, a Cypriot company owned by Vinod Adani called Vakoder Investments received $232 million in loans from a businessman and another offshore firm in Dubai, according to corporate documents in Cyprus. Vakoder Investments then spent $220 million buying convertible bonds (credit certificates that pay interest and can be redeemed on a specific date) from Adani Estates and Adani Land Developers, two subsidiaries of Adani Infrastructure and Developers. Later, the term on these bonds was extended until 2024, which means that Vinod most likely holds these securities until now.
Up until 2012, Adani Infrastructure and Developers was a subsidiary of the publicly traded Adani Enterprises. However, according to Adani Enterprises’ 2013 financial report, around the time of those transactions in June 2012, Adani Enterprises apparently sold Adani Infrastructure and Developers for $81.5 million. Four years later, the company reappeared. in the annual reports of Adani Enterprises, this time as an “affiliated enterprise”.
“The reappearance of Adani Infrastructure and Developers in the financial statements raises doubts that the sale was real,” says Mark Humphrey-Jenner, assistant lecturer in finance at the Business School at the University of New South Wales. “Shareholders should be rightfully concerned about whether the reported profitability really reflects the real numbers or whether the figures are drawn for beauty.”
Despite the proposed sale in 2012, Forbes found that by 2017, the Adani family still controlled Adani Infrastructure and Developers through another company called Adani Properties and is owned by three shareholders: the Adani family trust fund, Gautam’s son, Karan Adani, and a subsidiary of Adani Enterprises called Adani Commodities.
“It seems that the company or someone else benefits from overstating revenue and hiding credit funds from reporting,” says Dan Taylor, lecturer in accounting at the Wharton School of Business at the University of Pennsylvania. “And then the question arises: what was the real business rationale for this transaction?”
The most likely explanation for such operations is family politics. “Sometimes you want to give one family member the management of a certain division of the company,” Hanna explains, and clarifies that in a family business in India, such complex arrangements are common.
Even though Hindenburg Research names Vinod as the central figure in the billion-dollar scam, Vinod himself would certainly take offense at such a title. In 2016, along with one of his consultants, he wrote in a sponsored editorial article: “In an age of lies and corruption, you rarely meet a person who sticks to his word and values devotion and loyalty to his principles over greed and his own whims. Vinod Shantilal Adani is one of those people who honors the heritage of the family and promotes these values himself.”
Translation by Anton Bundin