US indictments scythe US$27 billion off value of India’s Adani Group firms

ADANI Group companies lost about US$27 billion in market value on Thursday (Nov 21) after US prosecutors charged the Indian conglomerate’s billionaire chairman in an alleged bribery and fraud scheme.

Gautam Adani’s flagship Adani Enterprises closed down 23 per cent in its worst one-day drop since February last year.

Other group firms – Adani Ports, Adani Total Gas, Adani Green, Adani Power, Adani Wilmar and Adani Energy Solutions, ACC, Ambuja Cements and NDTV – also fell between 6 per cent and 19 per cent.

The sharp selloff had dropped the capitalisation of the 10 Adani-backed companies to about US$142.6 billion by 1033 GMT, from US$169.1 billion on Tuesday.

“Normally investors do not like any lapse of corporate governance and till the time there is clarification, investors will shy away from Adani Group stocks,” said Saurabh Jain, a retail equities analyst at SMC Global Securities.

In a statement, Adani Group dismissed the accusations as “baseless and denied”, and vowed to seek “all possible legal recourse”.

They come less than two years after US short-seller Hindenburg Research in February 2023 accused the group of improper use of tax havens and involvement in stock manipulation, which the conglomerate also denied.

Late Wednesday, US authorities said Adani and seven other defendants, including his nephew Sagar Adani, agreed to pay about US$265 million in bribes to Indian government officials for contracts expected to yield profit of US$2 billion over 20 years, and develop India’s largest solar power project.

The prosecutors added that the Adanis, along with former Adani Green Energy CEO Vneet Jaain, raised more than US$3 billion in loans and bonds by hiding their corruption from lenders and investors.

Adani Green Energy cancelled plans to raise US$600 million in US dollar-denominated bonds after the news.

“The group faces growing challenges in accessing global capital markets amid heightened scrutiny,” said Narinder Wadhwa, managing director of SKI Capital.

In early Asian trade, Adani dollar bonds slumped, with prices down three to five cents on bonds for Adani Ports and Special Economic Zone. They were the largest falls since Hindenburg’s short-seller report.

Group firms also dragged down Indian benchmarks on the day, with the NSE Nifty 50 falling 0.72 per cent and the BSE Sensex losing 0.5 per cent.

US-based investment firm GQG Partners, which invested US$1.87 billion Adani Group companies shortly after the Hindenburg report in a sign of support, saw its Australia-listed shares plunge 23 per cent on Thursday. REUTERS