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

7:17 am Thursday, November 21st, 2024

By Sethuraman N R, Bharath Rajeswaran and Indranil Sarkar

(Reuters) -Adani Group companies lost about $27 billion in market value on Thursday after U.S. prosecutors charged the Indian conglomerate’s billionaire chairman in an alleged bribery and fraud scheme.

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

Adani Ports, Adani Total Gas, Adani Green, Adani Power, Adani Wilmar and Adani Energy Solutions, ACC, Ambuja Cements – also fell between 7% and 19%. NDTV shares closed up 0.2%.

The sharp selloff had dropped the capitalisation of the 10 Adani-backed companies to about $142.6 billion by 1033 GMT, from $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 U.S. 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, 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 Adani Green Energy CEO Vneet Jaain, raised more than $3 billion in loans and bonds by hiding their corruption from lenders and investors.

Adani Green Energy cancelled plans to raise $600 million in U.S. 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 3 to 5 cents on bonds for Adani Ports and Special Economic Zone [US00652MAJ18=TE]. 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% and the BSE Sensex losing 0.5%. [.BO]

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

($1=84.4000 rupees)

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