Stocks of the Adani Group fell sharply and widely on Thursday, after US prosecutors announced charges of bribery against Gautam Adani.
The charges, announced late Wednesday, allege Adani and his executive engaged in a multi-billion dollar scheme involving bribery in order to secure solar energy contract in India.
Adani Energy Solutions shares plunged 20%, causing the market to react.
Adani Green Energy dropped 18%. Adani Total Gas, Adani Power, and Adani Ports all fell between 13-14%.
Other subsidiaries, such as NDTV (-11%) Adani Wilmar -8%, and Sanghi Industries -6%, also suffered significant losses. This reflects the ripple effect throughout the conglomerate.
Adani Green Bond Offering Scrapped amid Fallout
Adani Green Energy has cancelled its plans to issue $600 million in bonds scheduled for Thursday, citing legal and market turmoil.
Bloomberg data shows that Adani Green Energy’s dollar bonds issued in march dropped by a record 15c, reaching a low price of 80c.
Bonds issued by other Adani Group companies also saw a significant drop, with some bonds falling as low as 74c — their steepest decline since the Hindenburg Research 2023 report.
“While Adani has shown resilience in handling previous accusations, including those made by Hindenburg, the incident highlights the risks associated with emerging markets, especially in terms of governance, transparency and regulatory oversight,” stated Mohit Mirpuri in a Bloomberg article.
Bribery allegations made against Adani and his nephew explained
The indictment, filed by the US Department of Justice and the Securities and Exchange Commission, outlines serious allegations against Adani, Sagar Adani and other executives.
The accused are accused of conspiring to defraud US Investors and global financial institutions by false representations.
According to the indictment the group paid $265,000,000 in bribes in order to secure state solar energy contracts.
The prosecution claims that these contracts were projected by the prosecutors to generate $2 billion of profits over a 20-year period.
Some participants in this scheme allegedly called Gautam Adani “Numero Uno” and “the Big Man.”
According to reports, the bribes were hidden from lenders and investors in order to secure over 3 billion dollars of loans and bonds for Adani Green Energy.
The charges are brought under the Foreign Corrupt Practices Act, which targets corruption and bribery when it comes to international business.
Lisa H. Miller, Deputy Assistant Attorney-General, called the allegations “massive fraud,” saying, “This indictment alleges plans to pay over 250 million in bribes to investors and banks, lie to them to raise billions of dollar, and obstruct the justice.”
Adani Group suffers a second major blow
This is a significant setback for Gautam Adani, whose business empire was under fire after the Hindenburg Research report in January 2023 accused the group of financial misbehavior.
This report resulted in a loss of $150 billion in market capitalization for Adani’s businesses.
Gautam Adani is now facing not only financial problems but also possible legal consequences.
According to reports, arrest warrants for Gautam Adani as well as his nephew Sagar Adani have been issued, further complicating the group’s problems.
What’s next for Adani Group
The allegations have cast an extensive shadow over Adani Group’s global operations, and its access to the international capital markets.
It could also intensify the withdrawal of foreign funds, which has already reached record levels in October.
Bloomberg reported that “Foreign Investor Sentiment could be affected” if the investigation escalates. Manish Bhargava is the CEO of Straits Investment Management. He added that the case increases reputational risks for Straits Investment Management.
The charges were brought after Adani announced a new investment in green energy, and congratulated Donald Trump for his election victory.
Trump, who is known for his pro energy deregulation stance has pledged to simplify the rules for energy companies including those operating in the renewable sectors.
The trajectory of the case will depend on the incoming Trump Administration.
Breon Peace, Brooklyn US Attorney appointed under Biden is expected to step aside.
Gary Dugan, CEO Global CIO Office, said that it is unusual for accusations like this to surface during a power transition. “We hope that Donald Trump will dismiss it once he is in office.”
Adani Group is yet to issue a response, but analysts expect that its bonds and stocks will continue to fluctuate as the legal process progresses.
This post Adani shares plummet and bond offering is withdrawn as Gautam Adani confronts US bribery accusations: what’s the next step? This post may be updated as new information becomes available
This site is for entertainment only. Click here to read more
