Photo: Reuters file
Stocks and bonds of India's Adani Group experienced a second consecutive session of decline on Friday, following the issuance of a US arrest warrant for its billionaire founder, Gautam Adani, in connection with an alleged $265-million bribery scheme. Adani Green Energy, the focal point of the case, saw an eight percent drop in early Friday trading, resulting in a total loss of $7 billion in market value since the indictment news broke. The conglomerate's overall market value has plummeted by $33 billion.
US prosecutors have indicted Adani and seven other individuals, accusing them of conspiring to bribe Indian government officials to secure contracts potentially worth $2 billion in profit over 20 years, as well as to develop India's largest solar power plant project. Adani Group has vehemently denied the allegations made by US federal prosecutors and the US Securities and Exchange Commission in a related civil case, asserting that they are 'baseless' and pledging to pursue 'all possible legal recourse'.
Adani Ports and Special Economic Zone's debt maturing in 2027 traded at 91.5 cents on the dollar, down more than a cent from the previous day and over 4 cents lower than Wednesday's prices. Longer-dated maturities have declined by approximately 5 cents in two days, trading near 80 cents.
Ratings agency S&P warned that the group's access to equity and debt markets could be hindered due to its ambitious growth plans. S&P also indicated it might downgrade the ratings of Adani Electricity, Adani Ports, and an Adani Green Energy subsidiary if these companies face reduced funding access and increased costs.
Investors are closely monitoring whether additional Adani deals might be jeopardized by the indictments. Kenya, for instance, has canceled a procurement process worth nearly $2 billion that was expected to award control of the country's main airport to the Adani Group. Additionally, it scrapped a separate 30-year, $736-million public-private partnership deal signed with the energy ministry last month for the construction of power transmission lines.
Nimish Maheshwari, an independent analyst, noted that India's renewable energy sector, crucial for global climate goals, could see reduced international investment due to this controversy. Investors might demand more transparency and thorough due diligence, potentially slowing down project financing.
Adani Green also called off a scheduled $600-million US bond sale. US prosecutors allege that Adani, his nephew Sagar Adani, and others bribed Indian officials to gain business advantages in renewable energy projects that benefited Adani Green and Azure Power, a company listed on the New York Stock Exchange until late 2023. They are also accused of making misleading statements to the public, including US investors, despite being aware of the US investigation in 2023.
Despite the Adani Group's significant presence in the Indian market, Citigroup analysts estimate that Indian banks' exposure to the group is less than one percent of total loans for most lenders.
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