Adani Bribery Indictment Fallout: Stocks Tumble, S&P Outlook Downgraded, And Legal Challenges For Asia's Richest Man

Shares of Adani Group companies have fallen for the second consecutive day, as new claims of bribery raised concerns about the conglomerate. The stock drop is driven by the U.S. charges against Adani Group's founder, Gautam Adani, and associates over an alleged bribery scheme.

Stocks Fall Following Bribery Allegations

Adani Green Energy, the flagship company of the Adani Group, saw its stock price drop significantly, falling by nearly 6 per cent in early trading on Friday. The stock opened at Rs 1,085 per share, but quickly dropped to Rs 1,021, marking a 28 per cent decline over the past two trading sessions. Other major Adani Group stocks, including Adani Energy Solutions and Adani Enterprises, also experienced considerable losses, with their prices falling by as much as 27 per cent, as reported by Reuters.

The sudden sell-off follows the recent announcement from the United States that Gautam Adani and seven other defendants were charged by prosecutors with taking part in a bribery scheme. In order to obtain solar energy contracts that were expected to yield $2 billion in profits over 2 decades, the defendants allegedly conspired to bribe Indian government officials $265 million.

S&P Global Cuts Outlook on Key Adani Group Firms

S&P Global Ratings has downgraded its outlook for three Adani Group entities: Adani Ports and SEZ Ltd, Adani Green Energy Ltd (AGEL RG2), and Adani Electricity Mumbai Ltd, revising them to ‘negative’ following bribery charges filed in the U.S. against founder Gautam Adani. S&P claims that worries about possible threats to the group's cash flows, liquidity availability, borrowing costs, and governance are reflected in the rating.

The downgrade follows U.S. federal charges against Gautam Adani and other executives, who are accused of being involved in a bribery scheme worth $250 million linked to solar energy contracts in India. S&P warns that these allegations pose a significant risk to the group’s financial stability, and if validated, could result in higher borrowing costs and limited access to capital. This follows concerns raised by Hindenburg Research about the Adani Group’s financial management and governance.

Adani Green Halts Bond Issuance Deal

Adani Green Energy called off its planned $600 million bond issue in U.S. dollars, citing U.S. developments as the reason, dealing the Adani Group yet another setback. This move was prompted by the U.S. federal charges against Gautam Adani. The cancellation of the bond deal sent shockwaves through the financial markets, as the Adani Group’s U.S. dollar-denominated bonds saw a sharp decline in value. Adani Green Energy was preparing to launch the bond offering but scrapped it shortly after news of the indictment broke.

Prosecutors have accused Gautam Adani and his associates of securing over $3 billion in loans and bonds by concealing their alleged misconduct from investors and lenders. The charges allege that the bribes were intended to help the Adani Group secure lucrative solar power contracts, and the group’s bonds and stock prices have taken a hit in the wake of these revelations.

Adani Group Denies Charges

The Adani Group has firmly rejected the allegations, labelling them baseless, as claimed by Reuters. In a statement, the company emphasized its intention to explore "all possible legal recourse" to defend itself against the charges. The group emphasized its intention to contest the allegations in court and maintained that it has adhered to all applicable laws and regulations.

The market's response has been prompt despite these assurances and Adani Group entities have seen large declines in bond and stock values. The group may not be able to obtain financing in the future due to the ongoing legal issues, which may also continue to influence investor opinion.