Adani Group Shares Plummet 20% Amid Fraud Charges
The Adani Group faced a major setback as shares dropped by 20% following U.S. bribery and fraud charges against chairman Gautam Adani and others. This decline marks the sharpest fall since earlier controversies, affecting Adani Enterprises and other subsidiaries significantly.
BUSINESS
The Adani Group suffered a severe setback on Thursday, with its shares plummeting by as much as 20% after U.S. authorities filed charges of bribery and fraud against Gautam Adani, the conglomerate's chairman, and seven others. The allegations, linked to a multibillion-dollar scheme to secure solar energy contracts in India, have caused the sharpest drop in Adani stocks since the Hindenburg Research incident earlier in 2023.
Adani Enterprises, the flagship company, saw its share value decline by the maximum permissible limit of 20%. Similar losses were recorded across other group entities, including Adani Green Energy (19.17%), Adani Total Gas (18.14%), and Adani Power (17.79%). Adani Ports & Special Economic Zone faced a 15% slump, while Ambuja Cements, ACC, NDTV, and Adani Wilmar reported double-digit percentage declines, with several hitting their lower circuit limits.
The group's combined market capitalization has taken a hit of ₹2.25 lakh crore, bringing the total to approximately ₹12 lakh crore. Forbes reported that Gautam Adani’s personal wealth dropped by $10.5 billion, settling at $59.3 billion, further affecting his global billionaire ranking.
The U.S. indictment alleges that Adani and his associates paid $265 million in bribes to Indian officials to secure solar project contracts projected to yield $2 billion in profits over two decades. Additional accusations include securities and wire fraud. The U.S. Securities and Exchange Commission (SEC) has also filed a civil suit alleging investor fraud.
In response, the Adani Group has denied the allegations, calling them "baseless" and vowing to explore legal remedies. Despite their rebuttal, the charges have raised serious concerns about governance and transparency within the conglomerate.
Credit rating agency Moody’s expressed caution, stating that the charges negatively impact the credit standing of Adani companies. "The group’s ability to access capital and its governance practices remain key areas of concern," Moody’s noted.
The fallout has extended beyond India. GQG Partners, a significant investor in Adani stocks, saw its shares tumble by 26% on the Australian stock exchange. Furthermore, Adani Green Energy has withdrawn its planned $600 million bond offering in light of these developments.
As the legal proceedings unfold, the Adani Group faces intensified scrutiny from investors, regulators, and international stakeholders. The implications of these allegations are likely to shape the conglomerate’s trajectory in global markets for years to come.