Adani Group Stocks Dive 20% After U.S. Indictment on Bribery Charges
The fallout from the indictment has caused a massive selloff in Adani Group shares, triggering a significant drop in market capitalization.
New York: In a dramatic turn of events, Adani Group stocks witnessed a severe crash on Thursday, November 21, following the indictment of the group’s chairman, Gautam Adani, and seven other key executives in the United States over their alleged involvement in a multibillion-dollar bribery and fraud scheme. The fallout from the indictment has caused a massive selloff in Adani Group shares, triggering a significant drop in market capitalization.
Key Allegations in the U.S. Indictment
According to U.S. authorities, more than $250 million in bribes were promised by the Adani Group to Indian government officials to secure solar energy contracts. The alleged scheme is one of the largest international bribery cases tied to the renewable energy sector.
A five-count criminal indictment was unsealed in federal court in Brooklyn, charging Gautam S. Adani, Sagar R. Adani, and Vneet S. Jaain, senior executives of the Adani Group, with securities and wire fraud conspiracies. They are accused of misleading investors in the U.S. and global financial institutions by making false and misleading statements to raise funds for the Adani Group’s solar energy projects.
Also Read: Gautam Adani Faces U.S. Charges Over Alleged $250 Million Bribery Scheme
The indictment also includes Ranjit Gupta and Rupesh Agarwal, former executives of an Indian renewable energy company traded on the New York Stock Exchange (U.S. Issuer), as well as Cyril Cabanes, Saurabh Agarwal, and Deepak Malhotra, former employees of a Canadian institutional investor. They face charges of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) in connection with the alleged bribery scheme.
Massive Selloff Hits Adani Group Stocks
The news of the indictment triggered sharp losses in Adani Group stocks, with several of the conglomerate’s shares hitting their lower circuit limits in early trade on Thursday.
- Adani Energy Solutions plunged by 20% to ₹697.70 on the Bombay Stock Exchange (BSE).
- Adani Enterprises and Adani Ports and Special Economic Zone (APSEZ) dropped by 10% each, closing at ₹2,538.20 and ₹1,160.15, respectively.
- Ambuja Cements saw a 10% drop, hitting ₹494.65, while Adani Green Energy and Adani Power faced declines of 19% and 18%, respectively.
- Shares of Adani Wilmar fell by 10%, while Adani Total Gas dropped by 18%. Other stocks from the group, including ACC and NDTV, also saw significant drops of 15% and 14%, respectively.
Impact on Adani Group Market Capitalization
The sharp decline in Adani Group stock prices wiped out approximately ₹2 lakh crore from the group’s market capitalization (m-cap). As per Capital Market data, the group’s total m-cap plummeted to nearly ₹12.43 lakh crore, down from ₹14.31 lakh crore in the previous trading session.
The market’s reaction to the U.S. charges raises concerns about the long-term financial stability of the Adani Group, which has faced significant challenges in recent years, including a sharp selloff triggered by an earlier Hindenburg Research report. This report, released in January 2023, accused the Adani Group of improper use of offshore tax havens, leading to a $150 billion market value loss.
Adani Group Scraps $600 Million Bond Amidst Crisis
In response to the growing crisis, the Adani Group has decided to scrap a $600 million bond issuance, further signaling the pressure the conglomerate is facing in international markets. The news of the indictment caused U.S.-denominated bonds to plummet in Asian trading.
What Does This Mean for Investors?
This latest development highlights the growing legal and financial risks associated with investing in the Adani Group. With the ongoing legal battles and the alleged corruption charges, global investors are closely watching the situation, especially those with significant stakes in the conglomerate.
Also Read: Sensex, Nifty Tumble Amid Sharp Fall in Adani Group Stocks and Foreign Fund Outflows
The U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ) continue to probe the Adani Group’s financial practices, and this new indictment could have significant ramifications on the group’s ability to raise funds from international investors in the future.
Adani Group’s Reputation Under Fire
The Adani Group’s international reputation has taken a substantial hit following the U.S. indictment, as it faces growing scrutiny not only from U.S. authorities but also from investors globally. This is the latest in a series of challenges for the group, including allegations of stock manipulation, environmental concerns, and accusations of corporate governance lapses.
The Indian government is also under pressure to address allegations related to the Adani Group’s influence in securing government contracts. As the case progresses, it could have far-reaching consequences for the Indian business landscape.
A Timeline of Key Events for Adani Group
- January 2023: Hindenburg Research report accuses Adani Group of stock manipulation and improper use of offshore tax havens.
- November 2023: The U.S. indictment against Gautam Adani and other executives charges them with involvement in a bribery scheme to secure solar energy contracts.
- November 2024: Adani Group stocks experience a significant selloff, leading to a massive loss in market capitalization.
Conclusion: The Road Ahead for the Adani Group
The charges against Gautam Adani and other senior executives mark a critical turning point in the Adani Group’s corporate history. While the group has yet to respond publicly to the latest allegations, the impact on its market capitalization, investor confidence, and global business operations is undeniable.
For now, the Adani Group faces an uncertain future, with legal battles ahead and growing scrutiny from investors, regulators, and the public. The outcome of this case will undoubtedly shape the future of the group and the broader Indian business landscape.
As the situation develops, investors and market participants should stay informed and exercise caution when considering exposure to Adani Group stocks.
