Gautam Adani Bribery Indictment in US Highlights: Adani Green Energy, Adani Energy Solutions’ stocks end nearly 7% lower

• ​Adani Green​ Energy (-7.96%)
• Adani Energy Solutions (-6.94%)
• ​Adani Power​ (-3.08%)
• ​Adani Wilmar​ (-0.64%)
• ​Ambuja Cement​ (+3.81%)
• ​ACC ​(+3.30)
• ​Adani Enterprises​ (+2.12%)
• ​Adani Ports​ & SEZ (+2.09%)
• ​Adani Total Gas​ (+1.51%)
• NDTV (+0.85%)

(NSE data)

• Adani Green Energy (-8.56%)

• Adani Energy Solutions (-7.29%) 

• Adani Power (-3.59%)
• Adani Wilmar (-1.05%)
• Ambuja Cement (+3.34%)
• ACC (+2.95)
• Adani Enterprises (+1.73%)
• Adani Ports & SEZ (+1.93%)
• Adani Total Gas (+0.20%)
• NDTV (+1.51%)

(NSE data as at 3.10 pm)

Andhra Pradesh Chief Minister N Chandrababu Naidu on Friday said the state government is in possession of the “chargesheet reports” filed in the US related to the alleged bribery scam involving the previous YSRCP government and the Adani Group, and “promised” to act on the irregularities.

PTI

Indian billionaire Gautam Adani has been indicted by U.S. prosecutors for his alleged role in a $265 million scheme to bribe Indian officials, sending shockwaves across his eponymous $142 billion ports-to-soybeans business conglomerate.

Here is what you need to know about the U.S. indictment.

THE MAJOR U.S. INDICTMENT

Gautam Adani, one of world’s richest people, faces his biggest challenge after being charged with seven others for alleged bribery related to power supply deals from energy projects in India, with U.S. authorities calling it “The Corrupt Solar Project”.

Adani Group says the allegations are baseless and has vowed to seek “all possible legal recourse”.

There is a growing spotlight on Sagar Adani, a millennial scion of the company who kept track of hundreds of millions of dollars of alleged bribes to Indian officials, in notes the prosecutors described as “bribe notes”.

The alleged bribes caught the attention of U.S. authorities as Adani’s companies were raising funds from U.S.-based investors in several transactions starting 2021.

STOCK ROUT AND FALLOUT

The U.S. indictment has jolted Adani Group debt and equity. Adani Group bonds dropped for a second session after the news. However, stocks in the conglomerates’ companies stabilized on Friday, a day after nearly $27 billion was knocked off from the combined market value of those shares.

In a major blow, Kenya ordered the cancellation of Adani infrastructure deals worth over $2.5 billion. And back in India, opposition parties have demanded a probe into allegations of wrongdoing and said they would raise the issue in parliament.

WHAT NEXT FOR ADANI, LEGAL OPTIONS

A key question is what is next for Gautam Adani? He is charged with foreign bribery, securities fraud, securities fraud conspiracy and wire fraud conspiracy.

Adani has not been arrested and his whereabouts are unknown, though he is believed to be in India.

A trial could still be a long way off, even if Adani is extradited or surrenders in the U.S.

If 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.

Reuters

• Adani Energy Solutions (-5.18%)
• Adani Green Energy (-2.04%)
• Adani Wilmar (-0.81%)
• Adani Power (-0.65%)
• Ambuja Cement (+3.30%)
• ACC (+3.843.73)
• Adani Enterprises (+2.49%)
• Adani Ports & SEZ (+2.41%)
• Adani Total Gas (+1.14%)
• NDTV (+1.34%)

(NSE data as at 2 pm)

Indian banks’ loan exposure to the embattled Adani Group seems “manageable” and any credit risk in the aftermath of its billionaire founder-chairman’s indictment in the United States looks “contained,” JPMorgan said on Friday.

U.S. prosecutors have charged Gautam Adani, one of the world’s richest people, and seven other people with paying $265 million in bribes to Indian government officials for contracts, including to develop the country’s largest solar power plant.

Adani Group has said the accusations are “baseless” and that it will seek “all possible legal recourse”.

Shares of Indian state-owned banks fell 2.7% on Thursday over worries about the extent of their exposure to the ports-to-power conglomerate that spans about 10 listed companies in all.

However, JPMorgan analysts said Indian banks’ exposure to the group was around 0.3% of outstanding loans as of March and that the loans were backed by asset cover.

“We don’t see major credit risk as the underlying companies are not implicated,” the Wall Street brokerage said in a note. Moreover, Indian banks’ exposure to Adani Green, which is at the centre of the allegations, is “materially lower” at just six basis points of banking system credit as of September, JPMorgan said.

“We do not see any systemic risk to Indian financials from a potential credit event in Adani Green, given the low exposure, asset cover, improving operating performance of the broader Adani Group and the capital and standard asset buffers at banks,” the investment bank said.

Reuters

Gautam Adani, Sagar Adani, Adani Green Energy, and the Adani group may have violated Securities and Exchange Board of India’s Listing Obligations and Disclosure Requirements by not disclosing to the exchanges, shareholders about the details of the ongoing investigations by the US authorities, and laid itself open to regulatory action.

“SEBI should issue a show cause notice to the Adani group companies on the inadequate disclosures on the US investigations,” said Shriram Subramanian, founder and managing director of proxy advisory firm InGovern Research Services.

The US Department of Justice and Securities and Exchange Commission, which is probing the conglomerate and Gautam Adani on charges of bribing Indian officials to get solar energy contracts, have also accused them of giving false and misleading information to investors, potential investors, and financial institutions.

Janaki Krishnan of businessline writes | Read here

• Adani Energy Solutions (-5.14%)
• ​Adani Green​ Energy (-1.09%)
• ​Adani Wilmar​ (-0.47%)
• ​Ambuja Cement​ (+3.88%)
• ​ACC ​(+3.84%)
• ​Adani Enterprises​ (+2.32%)
• ​Adani Ports​ & SEZ (+1.88%)
• ​Adani Total Gas​ (+1.25%)
• ​Adani Power​ (+0.75%)
• NDTV (+1.10%)

(NSE data as at 1.15 pm)

The recovery in Adani Group stocks, particularly Adani Enterprises’ strong performance, suggested improving investor confidence following Thursday’s selloff. The market showed resilience despite ongoing concerns about foreign institutional investor outflows, which had marked their 37th consecutive day of selling in the previous session.

Read here

Some global banks are considering temporarily halting fresh credit to India’s Adani Group but staying put with existing loans following U.S. prosecutors’ indictment of its billionaire founder Gautam Adani for fraud, sources said.

Reuters

Most Adani Group stock rebounded, led by the green energy unit, after US prosecutors’ charges of bribery against founder Gautam Adani erased $27 billion from the conglomerate’s market value on Thursday.

Adani Enterprises Ltd. reversed losses of as much as 7.3%, after the 23% plunge on Thursday made the stock the most oversold in 18 months. Adani Ports & Special Economic Zone Ltd. rose as much as 2.4%, while Adani Green Energy Ltd. rallied 6.5%. Nine of the group’s 10 firms rose.

Bloomberg

(NSE data)

Track bl’s stock market live here

• Adani Energy Solutions (-2.71%)
• Ambuja Cement (+5.01%)
• Adani Enterprises (+4.66%)
• ACC (+4.33%)
• Adani Green Energy (+3.90%)
• Adani Ports & SEZ (+2.87%)
• Adani Total Gas (+2.75%)
• Adani Power (+2.49%)
• NDTV (+1.51%)
• Adani Wilmar (+0.78%)

(NSE data as at 12.11 pm)

With the US filing civil and criminal charges against billionaire Gautam Adani and seven others over a multi-million-dollar bribery scheme, a prominent attorney here has said that the case could escalate significantly, potentially leading to arrest warrants and even extradition attempts.

Adani Group, however, denied the charges saying the allegations by US prosecutors are “baseless” and the conglomerate is “compliant with all laws”.

“US Attorney Breon Peace has the right to get arrest warrants issued against Adani and seven others indicted and serve them on the nations where they reside,” Indian-American attorney Ravi Batra told PTI on Thursday.

Input from PTI

Adani Group, whose billionaire chairman has been indicted for fraud by U.S. prosecutors, is facing accusations of racism at its Australian coal unit after an Aboriginal group filed a complaint with the country’s Human Rights Commission.

The Nagana Yarrbayn Wangan & Jagalingou Cultural Custodians in Queensland state said it filed a complaint alleging serious racial discrimination by the unit, Bravus Mining and Resources, earlier this week.

The complaint details how Adani employees sought to “verbally and physically obstruct and prevent” members of the Aboriginal group from accessing springs near Adani’s Carmichael coal mine “in order to perform cultural rites and share cultural knowledge”, the group said in a statement.

“We have endured years of discrimination and vilification from Adani, and we’re not putting up with this anymore,” Nagana Yarrbayn Senior Cultural Custodian, Adrian Burragubba said in the statement.

Input from Reuters

Refinancing for Adani Group’s green energy business is the biggest concern in the near term after the indictment of the conglomerate’s founder Gautam Adani by US prosecutors, according to research firm CreditSights. 

“Funding channels will inevitably squeeze across the Adani Group, with creditors likely to reduce or limit their group-wide exposure,” the firm’s analysts Lakshmanan R, Jonathan Tan and Nicole Chua wrote in a note. The analysts said they are most concerned about Adani Green Energy Ltd. “given it has the weakest liquidity and credit fundamentals.” 

The analysts pointed to short-term debt of about $2 billion at Adani’s green energy business and the unit’s decision to scrap a $600 million bond this week, the proceeds of which were earmarked for repaying foreign-currency loans. On Friday, most of the Adani Group’s dollar bonds extended declines after US charges this week alleging that the conglomerate’s founder helped drive a $250 million bribery scheme. 

The Adani Group said that the allegations are baseless. 

S&P Global Ratings revised to negative the credit outlook for multiple Adani Group entities on Friday, following the US bribery charges, citing funding access and financing cost concerns.

Input from Bloomberg

Adani Energy Solutions (-4.70%)

Adani Green Energy (-1.03%)

Adani Enterprises (-0.99%)

Adani Wilmar (-0.47%)

Adani Ports & SEZ (+0.39%)

Adani Power (+0.42%)

Adani Total Gas (+0.56%)

NDTV (+0.92%)

ACC (+3.15%)

Ambuja Cement (+4.50%)

(NSE data as at 11 am)

Following the indictment by US authorities of ​Gautam Adani​ and other officials ​S&P Global Ratings​ has revised to negative the outlook on Adani Electricity Mumbai, and Adani Ports and Special Economic Zone while affirming the ‘BBB-’ ratings on these entities.

The global rating agency that it revised outlook on Adani Green Energy Restricted Group 2 to negative, though it was ringfenced from the parent, Adani Green Energy, which was linked to the indictment. It said it affirmed the BB+ rating.

“The negative outlook on these entities indicates that, in our view, their cash flows could be materially affected if their funding access weakens, their funding costs rise significantly, or the allegations are proven, in addition to our assessment of their governance and business profiles,” it said.

bl Mumbai Bureau | ​Read here​

(Source: X/ @kharge)

The White House has said it is aware of the allegations against Indian billionaire Gautam Adani, chairman of Adani Group, who was indicted in New York over his role in an alleged multibillion-dollar bribery and fraud scheme.

Addressing reporters during her daily briefing, White House Press Secretary Karine Jean-Pierre expressed confidence that Indian and the US could navigate the issue without compromising their robust partnership.

“So, Obviously, we’re aware of these allegations, and I would have to refer you to the SEC (Securities and Exchange Commission) and DOJ (Department of Justice) about the specifics of those - of those allegations against the Adani Group,” she said.

Jean-Pierre said that the relationship between the US and India remains solid. “What I will say is on the US and India relationship, we believe that it stands on an extremely strong foundation anchored in ties between our people and cooperation across a full range of global issues,” she said.

She further expressed confidence in the ability of the two nations to navigate the situation. “What we believe and we’re confident about is that we’ll continue to navigate this issue as we have with other issues that may have come up. And so the specifics of this, this is something that the SEC and DOJ can speak to directly, but again, we believe that...this relationship between India and the US has been built on a strong foundation,” the White House spokesperson added.

The US Attorney’s Office for the Eastern District of New York had earlier unsealed criminal charges against Gautam Adani, his nephew Sagar Adani and other executives linking them to an alleged bribery scheme.

Inputs from ANI

• A U.S. indictment of three board representatives of an unrated Adani group entity could affect investor confidence in other Adani group entities (because the founder is on the board of multiple entities within the group), thereby potentially impairing their funding access and increasing their funding costs.
• U.S. prosecutors allege that the board members are involved in a US$250 million bribery scheme related to solar power contracts in India, and that they breached the anti-bribery compliance policy through misrepresentation to investors in an offshore bond (unrated).
• In our view, this could further raise questions regarding the management and governance of various Adani group entities. The indictment is independent of, but follows, a short seller report that led to investigation by Indian Supreme Court and India’s capital market regulator.
• Because of the potential impact across the wider Adani Group, we ​revised to negative ​the outlook on Adani Electricity Mumbai Ltd. (Adani Electricity) and Adani Ports and Special Economic Zone Ltd. (Adani Ports). We also affirmed our ‘BBB-’ ratings on these entities.
• Project finance entity Adani Green Energy Ltd. Restricted Group 2 (AGEL RG2) is a subsidiary of Adani Green Energy Limited (AGEL), the entity linked to the allegations. Although it is ringfenced from the parent, we revised to negative the outlook on AGEL RG2 and affirmed our ‘BB+’ issue rating.
• The negative outlook on these entities indicates that, in our view, their cash flows could be materially affected if their funding access weakens, their funding costs rise significantly, or the allegations are proven, in addition to our assessment of their governance and business profiles.
• Our rating on North Queensland Export Terminal Pty Ltd. (NQXT) already captures refinancing risk for maturities due in 2025; therefore, we affirmed the ‘BB’ issue rating on NQXT and the outlook remains stable. Similarly, Adani International Container Terminal Private Ltd. (AICTPL) is not exposed to refinancing risk or significant foreign exchange risk, so we affirmed our ‘BBB-’ issue rating on AICTPL and the outlook remains stable

Adani Group companies’ shares fell for a second straight day on Friday after U.S. prosecutors charged the Indian conglomerate’s billionaire chairman in an alleged bribery and fraud scheme.

Gautam Adani’s flagship Adani Enterprises fell 4% to hit their lowest since May 2023.

Adani Ports, Adani Total Gas, Adani Green, Adani Power, Adani Wilmar and Adani Energy Solutions fell between 3% and 10%.

ACC was down 0.5%, while Ambuja Cements and NDTV rose about 1% each.

Reuters input

An unprecedented bribery charge from US prosecutors against India’s largest corporate group is threatening to deepen the record exodus of global funds from the nation’s equities.

Adani Group’s shares lost nearly $27 billion in market value Thursday after US federal prosecutors accused its billionaire founder and other executives of allegedly plotting to bribe Indian government officials to win solar energy contracts. That may exacerbate the outflows from overseas investors who have already offloaded $14 billion of stocks since the end of September, including a record amount last month.

Although the Adani Group has limited sway over India’s $4.4 trillion stock market due to its relatively low weighting in the main equity gauges, the indictment will likely raise fresh doubts about corporate governance in the country. These new concerns add to existing worries about the slowdown in the earnings momentum that have pushed the main NSE Nifty 50 Index to a five-month low.

“The US charges on Adani Group could further spark risk-off sentiment,” said Nitin Chanduka, a strategist at Bloomberg Intelligence. India’s market is already “grappling with the sharpest earnings downgrades since the pandemic, with rich valuations resulting in a strong foreign exodus,” he said. 

Adani has denied the allegations, calling them baseless, and announced plans to seek legal recourse.

Bloomberg input

Last time it was the ‘Foreign Shortseller’ and this time it is the ‘Foreign Court.’ Can the Adani Group weather the storm this time?

To begin with it is important to understand that charges under US Federal Law - Foreign Corrupt Practices Act (FCPA) are not business breaking. Quite a few companies have managed to comfortably deal with it by paying some hefty penalties. But difference here though is that many of these companies like Cognizant Technology Solutions, Walmart, SAP amongst others were not frequently in the markets for capital raise. This is one area where, the Adani Group is likely to face speed bumps. Moody’s made a comment that the bribery allegations is credit negative event. Precisely the kind of events that stonewall the group’s insatiable appetite to expand fast by borrow large.

bl Research Bureau|​Read here​

• Adani Energy Solutions (-5.26%)
• Adani Green Energy (-5.20%)
• Adani Enterprises (-1.27%)
• Ambuja Cement (+1.62%)
• Adani Ports & SEZ (-1.13%)
• Adani Wilmar (-1.10%)
• Adani Power (-0.55%)
• Adani Total Gas (+0.03%)
• ACC (+1.72%)
• NDTV (+1.15%)

(NSE data as at 9.28 am)