He waited eight days to speak.
In those eight days, the fire lit by accusations of fraud, price manipulation, money laundering and governance issues from the New York short-seller Hindenburg Research has spread at lightning speed through almost every floor of his empire.
Gautam Adani, 60, on Feb. 2 addressed for the first time the deep crisis shaking Adani Group, a conglomerate with interests in ports, mines, airports, energy, data centers in India.
Adani Group is one of the industrial jewels of India and beyond Asia. This empire saw a meteoric expansion that coincided with the development ambitions of Indian Prime Minister Narendra Modi. The local press says the two men are very close.
But since Jan. 24, this empire has never been so fragile, losing $68 billion in market capitalization in five trading sessions.
Adani Enterprises Takes a Spectacular U-Turn
And in a particular humiliation, Adani Enterprises, the flagship company of this empire, on Feb. 1 had to make a spectacular about-face by deciding to cancel a sale of shares. The follow-on public offering, aimed to raise $2.5 billion, was set to be a success thanks to the support of Persian Gulf and Indian investors.
"Today the market has been unprecedented, and our stock price has fluctuated over the course of the day," the company explained. "Given these extraordinary circumstances, the company’s board felt that going ahead with the issue would not be morally correct."
"We are working with our book running lead managers (BRLMs) to refund the proceeds received by us in escrow and to also release the amounts blocked in your bank accounts for subscription to this issue."
Adani's U-turn came after Bloomberg News reported that Credit Suisse was no longer accepting bonds from companies that make up the Adani Group conglomerate as collateral for margin loans to its private banking clients.
These latest developments suggested that the crisis facing one of Asia's largest conglomerates was worsening. The founder thus truly needed to step up to the plate, especially since, according to experts, investors want clear answers to the questions Hindenburg raised.
Gautam Adani heard the message.
The billionaire broadcast a recorded video message of just over three minutes on Feb. 2. He reiterated that his empire's fundamentals are "very strong," that Adani Group would continue to meet its debt-payment deadlines, and that the financial health of all the entities of the conglomerate is good.
'Fundamentals of Our Company Are Very Strong'
At no time does Adani, who since the start of the crisis has lost his place among the top 10 richest people in the world, respond directly to Hindenburg's accusations. He doesn't even mention the name of the short-seller in his address.
"The fundamentals of our company are very strong," Adani said in the video. "Our balance sheet is healthy and assets, robust. Our Ebitda levels and cash flows have been very strong and we have an impeccable track record of fulfilling our debt obligations. We will continue to focus on a long term value creation and growth."
He continued: "Once the market stabilizes, we will review our capital market strategy," the billionaire added without elaborating.
The tycoon thanked institutional investors and shareholders "from within and outside the country."
"Despite the volatility in the stock over the last week, your faith and belief in the company, his business and his management has been extremely reassuring and humbling from all of us. We are very confident that we will continue to get support in the future also. Thank you again for your trust in us," Adani said.
As for the withdrawal of the offering, this decision, the billionaire asserted, "will not have any impact on our existing operations as well as our future plans. We will continue to focus on timely executions and delivery of projects."
In his address, Adani tried to project both an image of both serenity and combativeness. He wanted to show an image of a confident captain despite a drifting boat. The goal is to reassure the passengers -- in this case the investors and the shareholders of Adani Group -- that the boat will not sink.
The reaction of the markets in the next few days will tell whether the exercise was successful. Meantime, Hindenburg's accusations remain threatening clouds over his empire.
The Accusations From Hindenburg
The investment firm claims that the conglomerate has used shell companies in tax havens to boost its revenue and manipulate the stock prices of its various entities. The report, published Jan. 24, describes a galaxy of shell entities based in the Caribbean, Mauritius and the United Arab Emirates controlled by the Adani family.
"We have uncovered evidence of brazen accounting fraud, stock manipulation and money laundering at Adani, taking place over the course of decades," Hindenburg wrote.
"Adani has pulled off this gargantuan feat with the help of enablers in government and a cottage industry of international companies that facilitate these activities."
As a result, Hindenburg Research said that it had shorted stocks of the Adani conglomerate through U.S.-traded bonds and non-Indian-traded derivative instruments. This means that the New York-based investment firm, a well-known short-seller, is betting on a short-term drop in the prices of these equities.
Adani Group has rejected the allegations as baseless and has threatened to pursue all possible legal remedies in Indian courts. The conglomerate also went so far as to say that India was the target of Hindenburg.
"This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India," Adani Group said, in a 413-page report, on Jan. 29.
