Who is Gautam Adani, the Indian businessman who lost $50 billion in 10 days?

Nikhil Kumar

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When India’s Narendra Modi won the 2014 election to become the country’s prime minister, he flew in a private jet from his native state of Gujarat, in the west, to the capital New Delhi. The plane was emblazoned with the corporate insignia of a local business conglomerate that was only just beginning to make its presence felt on the global stage: the Adani Group.

It was a seminal moment that underlined the twin meteoric rises of Modi and Gautam Adani, founder of the conglomerate that bears his name and which does everything from operating ports and airports to manufacturing cement and food products.

Like Modi, Adani is a native of India’s western Gujarat state. Until January, he ranked among the world’s five richest people, with a fortune north of $120 billion that placed him in the company of Elon Musk and Jeff Bezos. He was unquestionably the richest person in Asia.

In the last few weeks alone, he has dropped precipitously in those rankings — and he has lost a fortune — after a New York-based financial firm accused his businesses of engaging in stock manipulation and accounting fraud.

The claims — angrily denied by Adani’s executives — triggered a sell-off in the stock prices of various Adani group companies. And that, in turn, has knocked Adani’s own net worth back by some $50 billion, according to calculations by Bloomberg. $50 billion — nearly half his net worth — gone in less than two weeks.

It has been a spectacular fall.

“We were shocked when the allegations appeared,” Girish Dane, the former head of the Gujarat Chamber of Commerce and Industry, told Grid.

Who is Gautam Adani? Dane has known Adani since his early years as a small-time trader in Gujarat, long before he vaulted into the ranks of the global superrich. A college dropout with no background in business, Adani was a shrewd dealmaker, Dani remembers, alive to new opportunities in new markets as India’s economy underwent a period of liberalization and expansion in the 1990s. He moved across sectors — from commodities to diamonds to infrastructure — doing deals that ultimately made him a billionaire.

“He progressed like anything,” Dane said. “He was a first-generation businessman. He went into the diamond business and then he started a trading business, and he continued rising.”

Friends in high places

To his critics, Adani’s rise aligned too closely for comfort with the rise of Modi, who, before he ran India, ran the state of Gujarat for more than a decade as its chief minister, the equivalent of a governor in the United States. The suggestion: Modi’s political influence had underpinned Adani’s wild business success.

Now 60, Adani has been seen frequently in Modi’s company over the years as his business grew at a lightning clip, expanding from Gujarat to other parts of India, and then internationally; the group now operates in places as far away as Indonesia and Australia. The Adani Group is involved in a series of lucrative industries, from mining to big-ticket infrastructure, including shipping ports and airports.

In 2020, the Financial Times labeled him “Modi’s Rockefeller,” citing instances when government policy seemed to have paved the way for him to expand his business in unexpected ways. There was, for instance, the Modi government’s decision in 2018 to approve the privatization of six Indian airports; before then, Adani had shown no interest in running airports and certainly had no experience doing so. But according to the FT, the Modi government tweaked the rules to allow bids from businesses without any experience operating airports. Adani’s firm secured all six airports on offer.

In response, Adani’s supporters often point out that he started out in business before Modi’s arrival on the political scene in Gujarat; his early ventures into commodities trading and the diamond market date back to the 80s and 90s.

“He was growing from before,” Dane told Grid.

But the data shows that Adani’s prominence and wealth touched new heights around the same time that Modi settled in as Gujarat’s chief minister — and his rise has only accelerated since Modi became prime minister.

One estimate, again from the FT, suggested that between 2014, when Modi became India’s leader, and 2020, Adani’s net worth climbed by some 230 percent as he scooped up government contracts and expanded his infrastructure businesses.

It’s why Rahul Gandhi, the leader of the opposition Congress party, has repeatedly accused Modi of favoring Adani with his policies.

“It is not Narendra Modi’s government. It is Ambani and Adani government,” he said at a recent political rally, referring to the country’s other leading billionaire, Mukesh Ambani of Reliance Industries.

Yet such criticism did little to dent Adani’s stratospheric rise. The college dropout-turned-billionaire appeared unstoppable — until last month.

Decline and fall

It wasn’t supposed to be this way. January was supposed to mark another milestone for Adani: a $2.5-billion share sale that would bring in new investors to his business.

But the sale was overshadowed, and ultimately stymied, by the astonishing share price rout that began in late January. That’s when Adani’s businesses were targeted by New York-based Hindenburg Research.

Hindenburg is what is known on Wall Street as a “short seller”: Instead of investing in shares in the hope their price will rise, the firm makes bets that share prices will fall. When they do, causing losses for other investors, it banks a profit.

And last month, that’s exactly what it did, using complex financial instruments to place bets against shares in Adani’s companies, which are traded on the Indian stock market. (Hindenburg hasn’t revealed precisely which entities it targeted.) The short seller published its rationale for doing so in a report that accused Adani of, among other things, using shadowy offshore companies to conceal the true extent of its ownership of various Adani holdings. It also claimed that Adani had used offshore entities to artificially prop up the share price of his companies.

Adani’s counter was a mix of anger — the company slammed the Hindenburg report as “a malicious combination of selective misinformation and stale, baseless and discredited allegations” — as well as a torrent of nationalist hyperbole not unlike that which members of Modi’s own ruling party often rely on when hit with criticism.

In one response to the report, the Adani conglomerate claimed Hindenburg wasn’t simply attacking its business; it accused the short seller of mounting “a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India.”

The rejoinders didn’t work. And although initially the company said that its share sale had been a success, on Wednesday it canceled the exercise, citing the “unprecedented” volatility in its stock price. “Given these extraordinary circumstances, the company’s board felt that going ahead with the share issue will not be morally correct,” the Adani Group said in a statement.

Meanwhile, the rout in the share prices of various Adani companies continues, further eroding the net worth of its founder and overshadowing what had been a long-held narrative about the man. For years, the answer to the question “Who is Gautam Adani?” was focused entirely on his near unbelievable rise and amassing of wealth. Now, the answer includes allegations of financial fraud and a whole new question: How far might he fall?

Thanks to Brett Zach for copy editing this article.