The turmoil engulfing Gautam Adani’s business empire that’s sparked a punishing stock market selloff and shaken faith in India as an investment opportunity may open the door to a democratic revival in the country, according to billionaire investor George Soros.
The fallout from US short seller Hindenburg Research’s attack on the conglomerate threatens to hurt investor confidence in India, has fueled concerns about the country’s regulatory framework and sparked questions about Prime Minister Narendra Modi’s ties with Adani.
“Modi is silent on the subject, but he will have to answer questions from foreign investors and in parliament,” Soros said in a speech ahead of the Munich Security Conference. “This will significantly weaken Modi’s stranglehold on India’s federal government and open the door to push for much-needed institutional reforms. I may be naive, but I expect a democratic revival in India.”
Soros, who has a net worth of about $.8.5 billion, is the founder of the Open Society Foundations, which gives grants to groups and individuals that promote democracy, transparency and freedom of speech.
The damning short-seller report in late January accusing the Adani Group of accounting fraud and stock manipulation sparked a stock rout that’s wiped out more than $120 billion of the empire’s market value and saw the man who was once the world’s second-wealthiest tumble down the rankings of the Bloomberg Billionaires Index.
The crisis has also put the spotlight on Modi’s relationship with Adani. India’s opposition has been drawing attention to the pair’s close ties and to the business tycoon’s meteoric growth that mirrors Modi’s political journey to the top elected office. Modi has not directly addressed the issue.
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The latest focus in the Adani saga is on the empire’s debt. After a borrowing blitz in recent years, a spike in yields and questions about access to overseas financing following the short-seller report has prompted warnings that the group’s more highly-leveraged companies having little capacity to absorb higher interest rates.