In early Asian trading on Thursday, November 21, the dollar bond prices of Adani Group companies experienced a sharp decline after the indictment of billionaire chairman Gautam Adani on charges of bribery and fraud. The indictment, which took place in New York, has had an immediate impact on investor sentiment, Reuters reported.
According to data from LSEG, the bonds issued by Adani Port and Special Economic Zone, set to mature in August 2027, fell by more than five cents on the dollar. Similarly, bonds of Adani Electricity Mumbai, maturing in February 2030, dropped by nearly eight cents. Bonds from Adani Transmission also saw a decrease, falling by over five cents, and are now trading just above 80 cents.
This marks the largest decline in Adani Group bonds since February 2023, when a report by short-seller Hindenburg Research raised alarms over the group’s heavy debt levels and its use of offshore tax havens. The latest bond price drops highlight growing concerns among investors following the legal troubles facing the conglomerate's chairman.
The latest controversy
The US Securities and Exchange Commission has charged billionaire Gautam Adani, founder and chairman of the Adani Group, with allegedly defrauding American investors and bribing officials.
Adani, 62, his nephew Sagar Adani, 30, executives of Adani Green Energy Ltd, and Cyril Cabanes, an executive of Azure Power Global Ltd were charged on Wednesday with conspiracy to commit securities and wire fraud, as well as substantive securities fraud, for their roles in a multi-billion-dollar scheme to obtain funds from US investors and global financial institutions through false and misleading statements.
The SEC alleged that the bribery scheme was orchestrated to enable renewable energy companies Adani Green and Azure Power to capitalise on a multi-billion-dollar solar energy project awarded by the Indian government.
The complaint charges them with violating the antifraud provisions of the federal securities laws and seeks permanent injunctions, civil penalties, and officer and director bars.
During the alleged scheme, Adani Green raised more than USD 175 million from US investors and Azure Power's stock was traded on the New York Stock Exchange, the SEC said in a statement.
Simultaneously, the US Attorney's Office for the Eastern District of New York unsealed criminal charges against Adani and Sagar Adani, Cabanes, and others linked to Adani Green and Azure Power.
The federal indictment unsealed in a federal court in Brooklyn charges five others with conspiracy to violate the Foreign Corrupt Practices Act in connection with the bribery scheme, involving one of the world's largest solar energy projects.
Federal prosecutors claim that between 2020 and 2024, Adani and his associates paid over USD 250 million in bribes to obtain solar energy contracts worth more than USD 2 billion in projected profits after tax over an approximately 20-year period.
Adani and seven other executives are accused of bribing Indian government officials to secure lucrative contracts and defrauding investors by making false statements about bribery and corruption.
They also allegedly tried to obstruct investigations, according to FBI Assistant Director James Dennehy.
The charges have sparked a storm in economic circles both in India and the United States. (With inputs from Agencies)
Published: 21 Nov 2024, 08:45 am IST
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