Davidson Kempner books profit of up to 70% on Adani bonds

Davidson Kempner made a profit of as much as 70% by buying Adani Group dollar bonds during the rout triggered by shortseller Hindenburg Research and later selling them when their prices recovered, according to people familiar with the matter.

The investment firm spent about $500 million on the notes of companies including Adani Green Energy Ltd. immediately after Hindenburg published its report in January 2023, said people, who requested anonymity because the information is confidential.

The US company then sold about half its holdings after India’s Supreme Court in January 2024 ordered the markets regulator to conclude its investigation into the Adani Group and said no more probes were needed, a reprieve for billionaire Gautam Adani’s conglomerate. The profits for the individual bonds ranged from 40% to 70%.

Hindenburg’s allegations of malfeasance — repeatedly denied by Adani officials — triggered a selloff in group companies’ stocks and bonds in early 2023. While some investors sold off their holdings for good, others considered the rout a buying opportunity. A year on from the broadside, the shares and dollar bonds of Adani firms have largely recouped their losses.

Spokespeople at Davidson Kempner and Adani declined to comment.