In just over six hours of trading on the stock exchange”MumbaiI lost a group Gautam Adani More than $50 billion of its market value, costing Adani more than $20 billion, or about a fifth of his fortune, in hours. This is the largest ever loss of Adani’s wealth and the sharpest market-driven decline of any billionaire’s wealth in the world AsiaAnd it’s a slam dunk for a man who has, over recent years, climbed the list of the world’s richest at a pace that seemed unstoppable.
During the past year, the rich Indian made me the surprise of the year, as he was able to jump to third place among the list of the 10 richest people in the world, after his wealth increased by 64.7 percent, with profits amounting to about $ 49.5 billion, and his wealth recorded an increase from the level of $ 76.5 billion at the beginning of the year. 2022 to about $126 billion at the end of the year.
But from the beginning of 2021 until the end of last year, the rich Indian was able to multiply his wealth by about 9.6 times, after his wealth jumped from the level of $ 13 billion at the beginning of 2021 to about $ 126 billion during the past year, with profits amounting to about $ 113 billion, to top this number in the third place among List of the 10 richest people in the world. However, since the beginning of this year, and until now, his wealth has declined by 26.4 percent, with losses amounting to about $ 33.3 billion, after his wealth decreased from the level of $ 126 billion at the beginning of 2023 to about $ 92.7 billion at the present time.
Bold and expensive acquisitions
The infrastructure mogul is known for making bold and costly acquisitions in a variety of fields. However, his attempts to own New Delhi TV have alarmed the Indian press and reignited fears about shrinking freedoms within the world’s largest democracy, especially since New Delhi is one of the few stations that includes a number of major broadcasters in India who They are often critical of Prime Minister Narendra Modi and the ruling Bharatiya Janata Party. One-year-old Adani is one of the prime minister’s closest business allies.
Investors’ reaction was more enthusiastic, with New Delhi TV shares gaining more than 50 percent in the days that followed the announcement, as they bet on the self-made industrialist’s ability to grow his business in sectors that Modi has prioritized development.
Previous data by Refinitiv indicated that the shares of the seven Adani companies listed in sectors ranging from ports to power plants have risen between 10 and 260 percent since the beginning of this year, with their value almost doubling over the past nine months. As a result, Adani briefly became the second richest man in the world last September, overtaking Amazon founder Jeff Bezos. It was the first time anyone from Asia ranked high in a list of the world’s richest people that has long been dominated by white tech entrepreneurs.
Where did Gautam Adani’s wealth come from?
Much of Adani’s fortune is tied to his sprawling conglomerate, which he founded more than 30 years ago. Valued at more than $220 billion at the end of last year, the conglomerate has created companies in industries ranging from logistics to mining that have boomed in recent years. Stunning and has moved into areas as diverse as media, data centers, airports and cement.
Before the recent losses, Adani, an early college dropout, was sometimes compared to businessmen like Rockefeller and Gilded Age, who built huge monopolistic businesses in the 19th century.
A first-generation entrepreneur, Adani started his career in diamond trading before founding a commodity trading company in 1988. Soon after, India launched groundbreaking reforms, fueling its economic growth, and adding his wealth along with it. In 1994, Commodity Trading became his first listed company in Mumbai.
A year later, the Mundra port began operating in Gujarat, a state in western India from which the businessman and Prime Minister of India hail. Often called the “crown jewel” of the group, Mundra Port is the country’s largest commercial port by volume. The Commodity Trading Company operates as an incubator for Adani’s business, and over time the company has become a major player in the stock market, having topped the commodity trading sector in India.
It also owns the largest private port operator in India and the largest private producer of thermal power. Not only is it one of the largest developers and operators of coal mines in India, but it also operates the controversial Carmichael coal mine in Australia which has faced fierce opposition from climate change activists who say it A “death sentence” on the Great Barrier Reef.
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In some sectors, Adani has become a leader through strategic buyouts. In May, Holcim sold the Indian cement company to Adani for $6.4bn, making his group the country’s second-largest cement maker.
Recently, he became the largest airport operator in India, acquiring airports through the government’s privatization campaign, although he had no prior experience in this field. While his empire is built on fossil fuels, the businessman is investing billions of dollars in clean energy, an ambition that aligns with India’s long-term climate goals.
Most of the companies in Adani’s empire are closely owned by the billionaire, his family and associated companies, including nearly 75 percent stake in commodities trading company Adani Power and Adani Transmission. It has also attracted partnerships with major international companies, including managing joint ventures with the French energy giant “Total Energies” and the Singaporean agribusiness group “Wilmar International”.
The concerns have existed since 2015
But concerns about debt-financed growth at Adani are not new. In a 2015 House of Debt report, Credit Suisse warned that the Adani Group was one of 10 Indian conglomerates experiencing increasing “financial stress” because of its loans. Nevertheless, the group continued to collect billions from Indian and foreign banks.
According to a recent report by Credit Suisse in September, the group’s total debt level has risen over the past five years from 1 trillion rupees (about $12 billion) to 2.6 trillion rupees (32 billion dollars). The bank expressed serious concerns about the Indian billionaire falling into a violent debt crisis. Analysts Lakshmanan R, Rohan Kapoor and Jonathan Tan cautioned that the group risks spreading itself too thin, adding that they remained “cautiously vigilant” of its appetite for expansion. “In a worst-case scenario, overly ambitious debt-financed growth plans could eventually turn into a massive debt trap, possibly culminating in default or default of one or more of the group’s companies,” they added.
The Adani Group responded with a 15-page report, saying that the “leverage ratios” of its companies “remain healthy and are in line with industry standards in the relevant sectors” and that they have “consistently declined” in the past nine years. They added that “their views have not changed from its original report.”