According to the news agency, embattled Gautam Adani engaged a prominent New York law firm to assist it on how to respond to fraud claims made by a new US hedge fund that have plunged shares of his name-sake conglomerate.
Companies accused of business mismanagement and wrongdoing frequently turn to the Wall Street law firm Wachtell, Lipton, Rosen & Katz for representation, the newspaper reported, citing sources.
According to the news agency, Wachtell’s primary focus will be on coordinating legal, regulatory, and public relations for the Adani Group, whose market value has fallen by more than $100 billion as a result of the investment fund Hindenburg Research’s explosive allegations of accounting fraud, share price manipulation, and money laundering against the company.
All of the accusations presented by Hindenburg Research have been vehemently refuted by Gautam Adani. Investor apprehension regarding the financial stability of his debt-ridden firm, however, has not been abated.
The Adani Group was slammed with additional bad news on Friday when the employment of the law firm was reported. Moody’s, a major player in credit ratings, cut the outlook for four Adani investments from stable to negative, and its venerable Lex column in the news predicted a bleak future for Gautam Adani. The widely read column stated, “Adani’s star shows every indication of burning out.”
The renewable energy division of the business, Adani Green Energy Ltd (AGEL), and Adani Green Energy, Restricted Group-1 are among the entities whose outlooks Moody’s lowered. Adani Transmission Step-One and Adani Electricity, Mumbai, are the other two.
Following the recent publication of a study by a short-seller outlining governance issues in the company, the market equity values of the Adani Group companies “significantly and rapidly declined,” according to Moody’s.
The lowest investment grade assigned by Moody’s is Ba3, which is what Adani Green Energy possesses. A negative outlook means there’s a good chance the ratings will be cut in the short- to medium-term. Companies with low ratings typically find it more difficult to sell bonds and raise loans to support expansion.
Adani Green’s outlook was changed from positive to negative, according to Moody’s, “taking into account the company’s significant capital expenditure programme and dependence on sponsor support, which may take the form of subordinated debt or shareholder loans, which will likely be less certain in the current environment.”
The eight primary Adani Group companies that are listed on the stock exchange experienced another decline on the day of Moody’s action on Friday. As soon as the equities reached the 5-percent circuit breaker, trading in two was halted.
Separately, Reuters reported that SEBI, the regulator in charge of policing the stock market, is looking into Adani Group’s connections to some of the buyers in the conglomerate’s botched $2.5 billion share sale.
According to sources, the Securities and Exchange Board of India (SEBI) is investigating into any possible violations of Indian securities regulations or any conflicts of interest in the share sale process. According to the news agency, the watchdog is looking into potential connections between the group and at least two Mauritius-based companies.
In other news, the weightings for four Adani Group firms have been reduced by global share index provider MSCI, which is also hurting the price of Adani shares. At the end of February, the modifications—which reflect declines in the value of Adani shares—will result in reduced weightings for the firms in the MSCI index.
Investors who follow benchmark indexes will start selling the shares as a result of the decreased stock weightings. The group’s flagship company, Adani Enerprises, Adani Total Gas, Adani Transmission, and cement-maker ACC are the organisations impacted by the change in MSCI weightings.
