Adani Group stocks recorded another week of losses. More than $100 billion has been wiped out from the Indian conglomerate following US short-seller Hindenburg Research’s scathing report last month that accused it of “brazen stock manipulation and accounting fraud.”
Adani recently called Hindenburg’s short report “bogus” and threatened legal action.
Now billionaire Gautam Adani might be preparing to go on the offensive after hiring New York-based law firm Wachtell, Lipton, Rosen & Katz, according to Financial Times, citing people with direct knowledge of the matter.
Wachtell is one of the world’s leading business law firms and has been used by companies to fight off activist investors or hostile takeovers.
The people said Wachtell’s services would focus on co-ordinating legal, regulatory, and public relations for the Adani Group. They will also provide access to crisis communications firms.
Adani Group needs to control the narrative surrounding the companies since the Hindenburg short report spooked investors. The reason is to prevent a further loss in the market cap of its companies. Also, limit the slide in bonds from diving deeper into distressed levels.
Meanwhile, Adani stocks slid on Friday after MSCI Inc. slashed the shares it considers freely tradable for four of the group’s companies. Flagship Adani Enterprises Ltd. closed down 4%.
“It’s hard to tell if the worst is over,” Manish Bhargava, fund manager at Straits Investment Holdings in Singapore, told Bloomberg.
“There are so many layers to Hindenburg’s report. Unlikely that long-term institutional investors will return to the name anytime soon. Speculators might,” Bhargava said.
There are fears that Adani Group’s troubles could spill into India’s banking sector. And this could be very problematic for Indian Prime Minister Narendra Modi’s economic growth plan as the conglomerate operates a vast amount of infrastructure, such as airports, ports, and mines, countrywide.
And now the waiting game begins as Wachtell strategies with Adani execs and lawyers to fend off the short seller.