Indian billionaire Gautam Adani’s business empire was rocked by US bribery charges on Thursday (November 21). The US indictment saw Adani’s net worth plummeting, shares of his company bleeding and contracts being cancelled.
The losses that Adani experienced come after the US Department of Justice (DOJ) and Securities and Exchange Commission (SEC) accused the Adani family and his associates of paying $265 million in bribes to Indian officials to secure lucrative solar energy contracts.
The Adani Group has refuted the US charges calling them “baseless”. “The allegations made by the US Department of Justice and the US Securities and Exchange Commission against directors of Adani Green are baseless and denied,” the conglomerate said, “All possible legal recourse will be sought.”
As the matter gathers pace, we try to unload what exactly has happened so far — what has Adani been charged with, how this impacts his business empire, and what comes next.
US charges against Adani
The issue erupted on Thursday after
Gautam Adani, the billionaire chair of Indian conglomerate Adani Group, was accused by the US of paying more than $250 million to Indian government officials to secure lucrative solar energy contracts worth more than $2 billion over 20 years.
According to the indictment in the United States District Court for the Eastern District of New York, Adani has been charged with foreign bribery, securities fraud, securities fraud conspiracy and wire fraud conspiracy.
“These offences were allegedly committed by senior executives and directors to obtain and finance massive state energy supply contracts through corruption and fraud at the expense of US investors,” US Deputy Assistant Attorney General Lisa Miller said in a statement.
It’s important to note that Adani has only been charged so far. He hasn’t been arrested and a trial seems to be a long way off if it reaches that point.
According to Reuters, if tried and convicted, Adani could face decades in prison as well as monetary penalties, though any sentence would ultimately be up to the judge overseeing the case. Based on the charges, he faces up to five years in prison for foreign bribery and up to 20 for securities fraud, wire fraud, obstruction of justice and conspiracy charges.
Adani Speaks
The Indian billionaire through his company has refuted all charges made by the US, saying that legal recourse would be sought.
The Adani Group in a statement said, “As stated by the US Department of Justice itself, the charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty. All possible legal recourse will be sought.”
Adani stocks plummet
As news broke out over the US charges against Adani, shares of his company began to tank in the Indian stock market. On Thursday (November 21),
shares of Adani Group companies plummeted by up to 23 per cent. Data shows that Adani Group companies lost a total of Rs 2.22 lakh crore in market capitalisation on Thursday.
Adani Green Energy fell 18.80 per cent, Adani Energy Solutions by 20 per cent, Adani Enterprises by 22.61 per cent, Adani Power by 9.15 per cent and Adani Ports by 13.53 per cent in the sell-off.
Some analysts noted that Thursday (November 21) marked their worst trading day since the
Hindenburg Research report in early 2023. The Adani group had lost a market cap of nearly Rs 1 lakh crore in January 2023, after the Hindenburg report came out.
And this tumble continued even on Friday as markets reopened. Shares of eight of the 10 listed Adani firms were trading lower on Friday morning. Adani Green Energy dropped 10.95 per cent and Adani Energy Solutions tumbled 8.57 per cent.
News agency PTI reported that the stock of the group’s flagship firm, Adani Enterprises, slumped 6.98 per cent, while shares of Adani Power tanked 6.38 per cent, Adani Total Gas went lower by 6.11 per cent, Adani Ports declined 5.31 per cent, and Adani Wilmar plunged 5.17 per.
However, after the early tumble on Friday, the stocks have recovered with The Economic Times reporting they surged by up to six per cent in midday trade.
Flagship Adani Enterprises saw a 2.5 per cent increase. Other Adani stocks, including Adani Green Energy,
Adani Ports, Adani Power, Adani Total Gas, and Adani Wilmar, surged by one to two per cent. However,
Adani Energy Solutions continued to trade nearly three per cent lower.
A $10.5 billion drop in net worth
The US allegations against Gautam Adani also saw the billionaire’s net worth dipping by a whopping $10.5 billion or nearly Rs 88,726 crore, on Thursday.
According to the Forbes Real-Time Billionaire Index, Adani, India’s second-richest man, now commands a net worth of $59.3 billion.
Forbes also reported that Gautam Adani’s brother, Vinod Adani, suffered a significant loss —$4.7 billion, reducing his net worth to $15.5 billion.
Ratings lowered
A day following the allegations, S&P Global Ratings has also lowered its outlook on three Adani Group entities to ‘negative’ from ‘stable’. S&P revised the outlook on a unit of Adani Green Energy, the entity linked to the allegations. It also downgraded the rating on Adani Electricity and Adani Ports, adding that it could go lower if allegations are proven true.
“The group will need regular access to both equity and debt markets given its large growth plans, in addition to its regular refinancing. We believe domestic, as well as some international banks and bond market investors, look at Adani entities as a group and could set group limits on their exposure,” S&P said in a note.
Kenya drops Adani deals
The losses for Gautam Adani keep piling as Kenyan President William Ruto cancelled deals with the Adani Group. He said that the Adani Group would no longer be involved in plans to expand Kenya’s electricity network and its main airport, Jomo Kenyatta International.
The Adani Group was to invest $1.85 billion in the Jomo Kenyatta airport and $736 million in state-owned utility KETRACO.
Ruto said, “I have directed agencies within the ministry of transport and within the ministry of energy and petroleum to immediately cancel the ongoing procurement,” attributing the decision to “new information provided by investigative agencies and partner nations”.
Adani scraps $600-million bond issue
Amid the US bribery charges, Adani Green Energy Ltd announced that it was not going ahead with its proposed $600-million dollar-denominated bond issuance. The company announced its decision in a regulatory filing, citing the indictment as the reason for its subsidiaries’ plans to defer the bond offering.
“The United States Department of Justice and the United States Securities and Exchange Commission have issued a criminal indictment and brought a civil complaint, respectively, in the United States District Court for the Eastern District of New York, against our Board members, Gautam Adani and Sagar Adani. The United States Department of Justice have also included our Board member, Vneet Jaain, in such a criminal indictment. In light of these developments, our subsidiaries have presently decided not to proceed with the proposed USD-denominated bond offerings,” said the statement.
Gautam Adani faces challenges — the allegations have shaken investors’ confidence and are impacting his business. It remains to be seen what happens next in this chapter.
With inputs from agencies