Gautam Adani has enlisted the services of Wachtell, a highly-priced legal firm in the United States, to defend against claims made by short-seller Hindenburg Research, a report published in Financial Times said.
“For decades, Wachtell has been among the most sought-after advisers by besieged corporate boards at some of the largest US companies trying to fend off activist investors or hostile takeovers,” the FT said in its article. Apparently, Wachtell is the same firm that tech billionaire Elon Musk had hired to fight his case against Twitter.
According to the report, Wachtell was approached by the Adani conglomerate through the office of the Cyril Amarchand Mangaldas firm, which is spearheading the defence of Adani Group. Cyril Amarchand Mangaldas is led by Cyril Shroff, whose daughter has married the son of Gautam Adani.
Wachtell has reportedly sought additional support for the Adani Group from crisis communication firms. As a law firm with expertise in repelling unwanted attacks from corporate raiders, Wachtell will concentrate on coordinating legal, regulatory, and public relations for the conglomerate.
On Friday, the decline in Adani group’s shares persisted as MSCI reduced the proportion of freely tradable shares it takes into account for four companies in its indices. The decision by MSCI was made after US short-seller Hindenburg Research released a report on January 24, accusing the Indian conglomerate of stock manipulation and improper utilization of offshore tax havens to conceal the extent of Adani family members’ ownership in the group’s companies. Despite the allegations, the Adani group has denied any misconduct.
Adani-Hindenburg saga
Gautam Adani, the founder and chairman of the Adani Group, one of the top 5 wealthiest people in the world before the report was published, saw his fortunes turn and wealth erode as nervous investors pulled money out by selling their holdings of the Adani Group stocks. Adani reportedly lost $100 bn in valuation following the allegations made by Hindenburg Research.
It all started last month after Hindenburg Research published a report accusing the Adani Group of stock manipulation and accounting fraud. Hinderburg, a short seller that relies on the trading strategy based on the expectation that the price of the security will fall, claimed that Gautam Adani, the founder and chairman of the Adani Group, has a net worth of approximately $120 billion, mainly due to an 819% average stock price growth in the group’s seven most significant publicly traded companies over the last three years. Predictably, the Adani share prices were pummelled in the days since the release of the report.
The grave allegations were contested promptly by the Adani Group, which trashed the Hindenburg Research report as a ‘malicious combination of selective misinformation and stale, baseless and discredited allegations’. Days later, it released a 413-page rebuttal to the Hindenburg Research report.
However, the crisis was exacerbated by the Adani Group’s decision to call off an oversubscribed FPO in view of the serious allegations levelled against the group by Hindenburg Research. While the business conglomerate trashed the report as malicious disinformation and released a whopping 413-page statement to contest the claims made by Hindenburg, the attendant confusion, uncertainty, and anxiety among investors sent the group’s stocks into free fall and saw the chairman’s valuation plunge considerably.
