The Adani Group faced another storm in the financial markets on 21 November, as its stocks and bonds plummeted following serious bribery charges filed by US prosecutors against its founder, Gautam Adani. The allegations center around a $250 million (~₹2,100 crore) bribery scheme aimed at securing solar energy contracts in India. The impact has been severe, with Adani Enterprises, Adani Green Energy, and Adani Energy Solutions experiencing sharp declines of up to 20% in opening trade.

Stock Market Impact

Adani Enterprises was locked in the lower circuit at ₹2,539.35, marking a 10% drop. While the stock has more than doubled since the lows triggered by the Hindenburg Research report in 2023, it still remains far from pre-report levels. Adani Green Energy dropped by 17%, reaching ₹1,172.5, and Adani Energy Solutions fell 20% to ₹697.25, hitting its lower circuit.

Allegations and Legal Actions

US prosecutors and the Securities and Exchange Commission (SEC) allege that Gautam Adani, along with senior executives Sagar R Adani and Vneet S Jaain, orchestrated an elaborate bribery scheme. The indictment, filed in Brooklyn, accuses the Adani Group of violating US federal laws, misleading investors, and obstructing justice by deleting electronic evidence and providing false statements to the Justice Department, SEC, and FBI.

The SEC has also filed a separate civil lawsuit against the Adani Group, adding to the mounting legal troubles.

Global Financial Fallout

The scandal extends beyond Indian markets, significantly impacting the group’s international securities. Adani Green Energy’s dollar-denominated bonds issued in March recorded a 15-cent decline, the steepest fall on record. Similarly, bonds from Adani Electricity Mumbai, maturing in February 2030, dropped by 8.6 cents on the dollar, according to Bloomberg data.

This marks the steepest drop in Adani’s international debt since the Hindenburg Research report of 2023, which had wiped out over ₹12 lakh crore in combined market value from Adani Group’s stocks and bonds.

Debt Reduction and Fundraising Efforts

The Adani Group has been actively working to stabilise its financial position amid mounting challenges. Earlier in March 2023, the group prepaid ₹7,374 crore in share-backed financing, pledging to clear all such loans by the end of the month to ease concerns about its debt levels.

Recent fundraising initiatives include:

• August 2024: A $1 billion QIP by Adani Energy Solutions to reduce debt and invest in power infrastructure.
• October 2024: A $500 million share sale by Adani Enterprises to fund renewable energy projects, establish a PVC plant, and reduce debt in its airport division.

Additionally, the group plans to issue $1.5 billion in dollar bonds under Adani Green Energy and Adani Energy Solutions by early 2025, aimed at debt refinancing.

Wider Implications

This latest controversy raises fresh concerns about Adani Group's governance and its ability to attract and maintain investor confidence, both domestically and internationally. With the group already under scrutiny from global regulators, these allegations could hinder its efforts to secure new funding and impact its ambitious renewable energy goals.

Conclusion:

The US bribery charges against Gautam Adani have triggered a crisis, leading to a sharp selloff in Adani Group’s stocks and bonds. This development, compounded by past controversies like the Hindenburg Research report, poses significant challenges for the group’s financial stability and market reputation. The coming months will be critical in determining whether the conglomerate can weather this storm and regain investor trust.

The Upcoming IPOs in this week and coming weeks are C2C Advanced System, Enviro Infra, Rajesh Power Services, Rajputana Biodiesel, Rosmerta Digital, Avanse Financial and Nisus Finance.

The Current active IPO is NTPC Green Energy and Lomosaic India.

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