US indictments scythe $34 billion from value of India’s Adani Group firms

5:28 am Thursday, November 21st, 2024

By Sethuraman N R, Bharath Rajeswaran and Indranil Sarkar

(Reuters) -Firms of India’s Adani Group conglomerate lost as much as $34 billion in market value on Thursday after U.S. prosecutors charged its billionaire chairman in an alleged bribery and fraud scheme.

Gautam Adani’s flagship Adani Enterprises tumbled as much as 23% to its lowest since Nov. 2023 for 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% and 19%.

The sharp selloff took down the total market capitalisation of the 10 Adani-backed companies to about $147 billion by 0854 GMT, from $169.08 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 within two years of U.S. short-seller Hindenburg Research’s accusations of improper use of tax havens and involvement in stock manipulation by Adani group, which the conglomerate has also denied.

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

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

Adani Green Energy, however, cancelled plans to raise $600 million in U.S. dollar-denominated bonds. The issue had been priced but was pulled after the news.

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

“Such withdrawals indicate a defensive posture as the group focuses on mitigating damage.”

In early Asian trade, Adani dollar bonds slumped, with prices down 3 cents to 5 cents on bonds for Adani Ports and Special Economic Zone [US00652MAJ18=TE]. They were the largest falls since the short-seller attack of February 2023.

Group firms also dragged down Indian benchmarks on the day, with the NSE Nifty 50 falling 0.75% and the BSE Sensex losing 0.6%. [.BO]

($1=84.4000 rupees)

(Reporting by Sethuraman NR, Bharath Rajeswaran and Indranil Sarkar in Bengaluru; Editing by Stephen Coates and Saad Sayeed)