FEBRUARY 20, 2023
The legendary investor says India’s prime minister Narendra Modi is weakened by the downfall of billionaire Gautam Adani’s empire.
George Soros did not need new enemies as the list of his detractors is already long.
The American billionaire of Hungarian origin entered the pantheon of global finance legends in 1992, by pulling off a masterstroke that you don’t learn from any business school in the world.
The pound sterling had collapsed on Sept. 16, 1992, forcing Great Britain to withdraw from the European Monetary System. It was called Black Wednesday, aka the 1992 Sterling Crisis.
Soros, at the time a currency trader, had bet against the British pound by shorting 10 billion of the currency. His bet was based on the fact that the British government’s attempts to support the pound would fail. He launched a public campaign against the pound. And he was proved correct. As a result, Soros is known for “breaking the Bank of England.”
This episode earned him the respect of business circles and markets, and international notoriety. Soros is one of the few financiers whose name is known in almost all continents of the world. It gave him colossal influence so that when he shorts a company, it is a safe bet that the pressure will increase by more than one notch on its executives. Conversely, when he invests in a company, it is viewed as a solid endorsement by other investors.
But Soros’ stroke of financial genius was also the trigger for enemies and a present to conspiracy theorists on both the left and the right. The American billionaire is, for example, accused falsely of being the symbol of a global elite wanting to rule the world.
The fact that he is one of the largest donors to the Democratic Party also fuels these theories, as does his support for associations fighting against racism, xenophobia and defending democratic values, making him the ideal target for autocrats and those who say that traditional values are threatened. Basically, the list of haters for the billionaire, whose net worth is valued at $8.5 billion as of Feb. 18 by the Bloomberg Billionaires Index, is long.
The investor does not seem to be bothered since he has just made statements that increase this list by a little more. These new enemies are powerful. They are Indian Prime Minister Narendra Modi and billionaire Gautam Adani, who was until recently the richest man in Asia.
On Jan. 24, a scathing report by New York short-seller Hindenburg Research called out Adani Group, the empire built by Adani, whose rise coincided with Modi’s ambitions to make India an alternative to China for investors.
“We have uncovered evidence of brazen accounting fraud, stock manipulation and money laundering at Adani, taking place over the course of decades,” Hindenburg wrote. “Adani has pulled off this gargantuan feat with the help of enablers in government and a cottage industry of international companies that facilitate these activities.”
‘Their Fate Is Intertwined’
As a result, Hindenburg Research had shorted stocks of the Adani conglomerate through U.S.-traded bonds and non-Indian-traded derivative instruments. This means that the New York-based investment firm, a well-known short-seller, is betting on a short-term drop in the prices of these equities.
Adani Group has rejected the allegations as baseless and has threatened to pursue all possible legal remedies in Indian courts. The conglomerate also went so far as to say that India was the target of Hindenburg.
“This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,” Adani Group said, in a 413-page report, on Jan. 29.
The financial markets have chosen to believe Hindenburg for the time being.
Since the report came out, the Adani empire, which is present in ports, energy, airports, data centers and other sectors, has lost around $127 billion in market capitalization, or half of its market value.
In India, the opposition to Modi has tried to engage Modi in a debate on this debacle because the Prime Minister, who plans to run for another term next year, is close to Adani, according to local media. But for now Modi has remained silent.
Soros just got involved. He believes that these allegations are a huge burden for Modi. He thus believes that the fate of the two men is linked. Basically, if Adani falls, Modi’s political career will be over.
“Modi and business tycoon Adani are close allies; their fate is intertwined,” Soros said during a speech at the 2023 Munich Security Conference on Feb. 16. “Adani Enterprises tried to raise funds in the stock market, but he failed. Adani is accused of stock manipulation and his stock collapsed like a house of cards.”
“Modi is silent on the subject, but he will have to answer questions from foreign investors and in parliament.”
For Soros, there is no doubt that the problems of Adani, whose personal fortune has shrunk by nearly $72 billion this year, according to the Bloomberg Billionaires Index, “will significantly weaken Modi’s stranglehold on India’s federal government and open the door to push for much needed institutional reforms.”
‘Modi Is No Democrat’
“I may be naïve, but I expect a democratic revival in India,” said Soros who strikes a blow at Modi by claiming that India is “a democracy, but its leader Narendra Modi is no democrat.”
Unsurprisingly, these remarks have caused an outcry in India from both the ruling and opposition camps, with Modi’s Bharatiya Janata Party saying that the legendary investor has “now declared his ill intentions to intervene in the democratic processes” of the South Asian nation, according to local media.
Soros had “now pronounced his desire to break the Indian democracy,” reacted Smriti Irani, a senior leader of the ruling BJP and minister in the Modi government.
“Our Nehruvian legacy ensures people like Soros cannot determine our electoral outcomes,” said the main opposition Indian National Congress party.