Suddenly things don't look quite so bright for the billionaires of India's new Gilded Age.
Even before a short-seller broadside against Gautam Adani knocked $153 billion off the value of his companies, the recent phenomenal wealth growth of the nation's super-elite was starting to sputter.
Four years ago, when Bloomberg first compiled an Asia-specific ranking of the 20 richest families, three Indian clans appeared, worth a combined $87.6 billion. By 2022, there were five, controlling $168.7 billion and tying in number with Hong Kong's storied dynasties.
This year, that breakneck growth has reversed. The five families to make the list — led by the Ambanis and Mistrys — have lost a combined $17.1 billion, according to the Bloomberg Billionaires Index.
That hit is the main reason why the overall net worth of Asia's wealthiest fell by $17.7 billion to $478.1 billion, the first drop since the annual ranking started in 2019.
While there are specific reasons for each clan's decline — for example the Ambanis' petrochemicals unit suffered from higher fuel-export taxes — all are now having to contend with the implications of the Adani crisis.
The accusations of fraud against a businessman who's aligned his infrastructure empire to the government's nation-building priorities has shaken confidence in India Inc. They've also put a new, harsh spotlight on the practices of the nation's conglomerates relative to the expectations of Western financial centers.
"The continued dominance of Adani and his peers, along with rapidly rising levels of crony capitalism and inequality, raise complex questions about the trajectory and sustainability of India's long-term growth story," said James Crabtree, executive director in Asia for the International Institute for Strategic Studies.
Adani, who's strongly denied the Hindenburg Research accusations, as a first-generation tycoon isn't on Bloomberg's dynastic-specific ranking*.
Yet some of the practices questioned in the Hindenburg report — like executive teams stacked with family members and intra-company flows of money to prop up struggling divisions — aren't uncommon locally.
For some of these sprawling family-controlled conglomerates with operations in everything from fossil fuels to food, such things are just the way business is done. To investors in London or New York, those can be a reason to run.
Governance is a familiar issue for the region. Some families, like the Lees of Samsung Group, have already been through painful adjustments. After simplifying their corporate structure and with a yearslong leadership vacuum now resolved, the Lees' fortune has rebounded $2.2 billion over the past year.
It's also notable that the dynasty that's gained the most is one known to be averse to debt: Thailand's Yoovidhyas, who made their fortune with Red Bull, have added $7.8 billion to their wealth, as European consumers have been gulping down more of the energy drink since the end of Covid lockdowns.
Chalerm Yoovidhya, a son of the Red Bull inventor and company shareholder, stands in the center of a small crowd. Photographer: Bryn Lennon/Getty Images
Overall, dynasties outside India remained relatively stable, with their combined fortunes slipping by less than $1 billion, even with a tumultuous year for markets.
With Asian companies rising in global importance, all eyes will be on how India's super-elite manages the transition as the families increasingly look beyond their borders for funding.
"India is far from the only global emerging economy to have a corporate landscape dominated by buccaneering tycoons and opaque family-owned conglomerates." Crabtree said. "But it is the largest and most important."
*The ranking of Asia's richest families was compiled as of March 14, 2023. It excludes first-generation wealth such as that of Alibaba Group Holding Ltd.'s Jack Ma, as well as fortunes in the hands of a single heir. For each clan, the overall net worth combines the wealth from different family branches.
With assistance from: Pui Gwen Yeung, Venus Feng, Yoojung Lee, Alex Sazonov, Benjamin Stupples, PR Sanjai, Bhuma Shrivastava and Kevin Dharmawan.
Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement