Ebix shares slide 34% after short seller questions accounting at India unit that is prepping for IPO


Shares of conglomerate Ebix Inc. EBIX, -43.42%, which offers payment services, travel and IT in India, slid 34% Thursday, after short seller Hindenburg Research questioned the company’s accounting in a new report. Hindenburg said some of the numbers the company has offered relating to its Indian unit EbixCash, which it is planning to take public in a $4.5 billion deal, do not add up. The unit has a prepaid gift card division which accounted for 82% of its 2021 revenue. Its auditor, RSM, resigned in February of 2021 because Ebix would not offer evidence regarding “unusual transactions related to the Company’s gift card business in India”. The auditor was “unable, despite repeated inquiries, to obtain sufficient appropriate audit evidence that would allow it to evaluate the business purpose of significant unusual transactions,” said the report. Hindenburg found that the gift card business has just two customers, neither of which appear to have a functional business. The company has had 7 different auditors since 2004 — often a red flag for accounting, and its app does not seem to work, said the report. Ebix did not immediately respond to a request for comment. Shares have fallen 52% in the year to date, while the S&P 500 SPX, -3.24% has fallen 23%.

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