US indictment against Gautam Adani could spark international probes, investor exodus

It could also make it difficult for the group to raise funds from foreign investors and bankers. There could be pressure on Indian regulators to reopen cases against the group. Meanwhile, the Adani stocks crashed up to 20 per cent in early morning trade on the Indian bourses.

‘Numero Uno accused’

According to several reports, US prosecutors announced on Wednesday that Gautam Adani and seven others, including his nephew Sagar Adani, allegedly paid $265 million in bribes to Indian government officials. This was reportedly done to secure contracts for India's largest solar power project, expected to generate $2 billion in profits over 20 years.

Reports say prosecutors also accused Gautam Adani, referred to in secret as "Numero Uno" and "the big man," of leading the scheme. They claimed that Sagar Adani used his cellphone to keep track of the bribes. Vineet Jain, the former CEO of Adani Green Energy, was also implicated in the case.

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The Adani Group has yet to respond to requests for comments, as the charges were announced early on Thursday (November 21) morning in India, outside regular business hours.

Future challenges for Adani Group

The Adanis might also find raising funds from international investors and banks. The indictment's immediate financial impact is already evident. Just hours after the charges were announced, the Adani Group cancelled a $600 million green bond offering, citing adverse market conditions. This abrupt decision underscores the erosion of investor confidence and the challenges the group faces in accessing foreign capital markets.

With a global footprint that spans ports, airports, energy, and infrastructure projects across Asia, Africa, and Australia, the Adani Group’s extensive international operations are now under the spotlight. The charges, which include bribery, fraud, and securities violations, have cast a shadow over the group’s reputation and raised significant questions about its governance practices.

Impact on global operations

The allegations have implications for the conglomerate’s global operations. With significant assets in regions governed by stringent anti-corruption laws, the Adani Group’s activities are now vulnerable to further examination. Authorities in jurisdictions such as the United Kingdom, Australia, and Canada, where the group is, may be prompted to investigate whether similar violations occurred under their legal frameworks.

Adani’s international partnerships in sectors like renewable energy and infrastructure are also at risk. Collaborators may be pressured to reassess their associations with the group to avoid reputational damage.

For Adani, the prospect of delays or cancellations in high-profile projects adds to the mounting uncertainty. Beyond this, the company’s governance standards—already under fire since the January 2023 Hindenburg Research report alleging stock manipulation and accounting fraud—are again under scrutiny. What seemed like a path to recovery for Adani after the Hindenburg crisis has now become a more severe reputational crisis with global implications.

Adani bonds witness massive fall

The repercussions were stark in bond trading as Adani’s existing US dollar bonds saw record declines, with some trading at just 80 cents on the dollar. This sell-off reflects deep scepticism among global investors, who now perceive the conglomerate as a high-risk bet. For a company as capital-intensive as Adani, which relies heavily on borrowing to fund its expansive infrastructure and energy projects, losing access to cost-effective financing is a critical blow.

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The looming threat of credit rating downgrades exacerbates the situation. If Adani Group companies are downgraded, borrowing costs will spike, and future debt issuances will likely be met with tepid demand or require steep risk premiums. The group’s ambitious plans for global expansion, including a $10 billion investment in U.S. energy and infrastructure, now appear increasingly tenuous.

The indictment has struck the very core of the Adani Group’s leadership. Gautam Adani, long seen as a symbol of India’s economic ascent and entrepreneurial prowess, now faces personal allegations of orchestrating a multibillion-dollar bribery scheme. The charges also implicate his nephew, Sagar Adani, and former executives, further tarnishing the leadership’s credibility.

The allegations amplify concerns about the group’s governance and ethical practices for investors and stakeholders.