The Adani Group faces a new wave of scrutiny as US prosecutors have charged founder Gautam Adani with participating in a $250 million (~Rs 2,100 crore) bribery scheme. The allegations revolve around securing solar energy contracts in India through illicit means, including false statements to US investors and violations of federal laws.
The indictment, filed in Brooklyn, New York, also names Sagar R Adani and Vneet S Jaain, accusing them of orchestrating an elaborate scheme. The charges include attempts to obstruct justice by deleting electronic evidence and misleading US authorities such as the Justice Department, the Securities and Exchange Commission (SEC), and the FBI.
Overview of Contents
SEC Civil Lawsuit
In addition to the criminal charges, the SEC has filed a separate civil lawsuit. The allegations have shaken investor confidence, particularly among those in international markets.
Market Impact: Stocks and Bonds
The news has had a significant impact on Adani Group’s securities:
Stock Market Losses
On November 21, Adani Group stocks fell sharply after the bribery charges were filed. Key highlights:
- Adani Enterprises: Locked in a lower circuit at Rs 2,539.35, down 10%.
- Adani Green Energy: Dropped 17% to Rs 1,172.5.
- Adani Energy Solutions: Fell 20% to Rs 697.25, also hitting the lower circuit.
Bond Market Losses
Adani Group’s dollar-denominated bonds saw a steep decline:
- Notes issued by Adani Green Energy in March fell by 15 cents—a record.
- Bonds from Adani Electricity Mumbai maturing in February 2030 dropped by 8.6 cents on the dollar, marking the steepest fall since the Hindenburg Research report in 2023.
Context: Previous Hindenburg Allegations
The allegations come less than two years after the Adani Group faced accusations from Hindenburg Research in January 2023, which triggered a massive loss of over Rs 12 lakh crore in the combined value of Adani Group stocks and bonds.
Debt Reduction and Fundraising Efforts
The group has been actively working to reduce debt and stabilize its financial position:
- In March 2023, the group prepaid Rs 7,374 crore in share-backed financing.
- In August 2024, Adani Energy Solutions raised $1 billion through a Qualified Institutional Placement (QIP).
- In October 2024, Adani Enterprises raised $500 million via a share sale to fund new energy projects and reduce airport unit debt.
Future fundraising plans include raising at least $1.5 billion through dollar bond issuances by Adani Green Energy and Adani Energy Solutions by early 2025, primarily for debt refinancing.
Conclusion
The allegations from US prosecutors and the SEC have reignited concerns about governance and transparency within the Adani Group. While the group has made significant efforts to address debt concerns and strengthen its financial position, the fresh controversy poses challenges to its recovery and reputation.