How Adani Group Has Mapped Its Comeback Strategy After Losing $132 Billion Market Value

This week will mark one month since US-based short seller Hindenburg came out with its report that rattled the Adani group. Since then, $132 billion has been chopped off the market value of Gautam Adani’s empire.

Damage Control By Adani Group

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Once Asia’s richest person, the Indian billionaire has hired top US crisis communication and legal teams, scrapped an $850-million coal plant purchase, reined in expenses, repaid some debt and has promised to repay more, as per Bloomberg.

Adani group is hoping to claw back and calm the jittery investors and lenders after Hindenburg Research’s report on January 24 accused it of accounting fraud, stock manipulation and other corporate governance lapses. The Adani Group continues to deny all these allegations.

Also Read:?Meet Nathan Anderson, The Man Behind?Hindenburg?Report

Tapping Global Firms For Help

Reflecting the group’s realization of the severity of the hit to its image, it has brought in Kekst CNC as a global communications advisor. The public relations firm co-headquartered in New York and Munich is known for its work with other corporate blow-ups in recent years, like WeWork’s valuation implosion in 2019, the Bloomberg report mentioned.

Kekst’s mandate is to help the group regain investor trust by laying out the proper context, not just on the Hindenburg allegations but other concerns that have swirled around the fundamental strength of the business, a person familiar with the matter said.

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Also, Kekst is working with Adani’s C-suite and communications team, and could put them through a “situation room” — the firm’s term for a simulated crisis in which executives are bombarded with tweets, calls from journalists and other stressful developments, said the person, as per Bloomberg report.

The Adani Group has also engaged American law firm Wachtell, Lipton, Rosen & Katz to fight back against the short seller’s claims, the Financial Times reported citing unnamed sources. Wachtell is one of the most expensive US law firms and has experience in defending clients facing attacks by shareholder activists.

As per the report, investors say they’re watching two things: the group’s high leverage ratios and its ability to generate cash flow after losing $2.5 billion in fresh funds from its withdrawn share sale (FPO).

Adani management has reportedly been taking steps to address these concerns. They told bondholders on a call last week that the goal is to cut the group’s ratio of net debt to EBITDA to below three times next year, from the current 3.2 times.

Prepaying Loans To Gain Confidence

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To gain back the confidence of investors amid the market rout since the Hindenburg report, Adani group has been prepaying some of its loans.?Adani Ports and Special Economic Zone plans to prepay Rs 1,000 crore ($120.8 million) in commercial papers maturing in March 2023, a company spokesperson said, as per a?Reuters report today.?Adani Ports has also paid Rs 1,500 crore to SBI Mutual Fund on commercial papers that matured on Monday, as part of its comeback strategy.

Before this announcement,?Adani Ports had said earlier this month that it is considering repaying the debt of about Rs 5,000 crore in the financial year 2023-24.

Earlier this month,? Gautam Adani and his family also prepaid Rs 9,250 crore ($1.1 billion) of debt backed by shares as the conglomerate sought to soothe investors' nerves. "This is in continuation of promoters' assurance to prepay all share-backed financing," the Adani Group had said.

Now it remains to be seen how far the stock rout goes on amid Adani group's efforts to claw back, as we close in on one month since Hindenburg research came out with its report against Adani group.

Also Read:?Here're The 17 Companies Against Which Hindenburg Research Alleged Frauds Before Rattling Adani Group

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