Adani Group shares tank up to 20% in early trade after US indictment in bribery

Adani group share price: Various stocks of the Adani group witnessed a steep decline on Thursday in early trade with Adani Enterprises falling 10%.

In Short

• Adani group stocks fall up to 20% after bribery charges
• Allegations involve $250 million scheme for solar contracts
• Adani's international securities also saw declines

Adani Group stocks fell sharply on Thursday, with shares dropping by as much as 20% in early trade. The decline in shares of Adani Group comes after US federal prosecutors charged Gautam Adani, the group's founder, with bribery allegations linked to securing solar energy contracts in India, reported news agency Reuters.

STOCKS PLUMMET ACROSS THE GROUP

Adani Enterprises hit the lower circuit at Rs 2,539.35, marking a 10% drop. Although the stock has recovered significantly from the lows seen after the Hindenburg Research report earlier this year, it is still far from its previous highs.

Adani Green Energy saw an 18% decline, trading at Rs 1,152.85, while Adani Energy Solutions tanked 20% to Rs 697.25, also reaching the lower circuit. Adani Ports and Special Economic Zone shares were also not spared, falling 10% to Rs 1,160.70.

US BRIBERY CASE ALLEGATIONS

The sharp drop in share prices followed news of an indictment by US prosecutors, accusing Gautam Adani and other executives, including Sagar R Adani and Vneet S Jaain, of orchestrating a $250 million (around Rs 2,100 crore) bribery scheme. The charges allege that bribes were paid to secure solar energy contracts in India.

The indictment, filed in Brooklyn, New York, claims that the scheme involved making false statements to US investors and violating federal laws. It also accuses the group of obstructing justice by deleting electronic records and misleading US regulatory and law enforcement agencies, including the Department of Justice, the Securities and Exchange Commission (SEC), and the FBI.

Adding to the pressure, the SEC has filed a separate civil lawsuit against the Adani Group.

ADANI GROUP REFUTES ALLEGATIONS

The Adani Group has strongly denied allegations of bribery and securities fraud levelled by US prosecutors against its chairman, Gautam Adani, and other key executives.

The group dismissed the charges as "baseless" and maintained that it operates with the highest standards of integrity and compliance. It further stated its intent to explore all possible legal remedies to address the accusations.

"As stated by the US Department of Justice itself, "the charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty." All possible legal recourse will be sought," the Adani Group spokesperson said.

GLOBAL IMPACT ON ADANI SECURITIES

The fallout extended beyond the Indian stock market, impacting Adani Group's international securities. Dollar bonds issued by Adani Green Energy in March 2023 plummeted by 15 cents, the steepest drop on record. Bonds from Adani Electricity Mumbai, maturing in February 2030, fell 8.6 cents on the dollar.

This marks the most significant decline in the group's debt securities since the Hindenburg Research report earlier this year, which wiped out over Rs 12 lakh crore in the combined value of Adani Group stocks and bonds.

"The US Department of Justice and the US Securities and Exchange Commission have issued a criminal indictment and brought a civil complaint, respectively, in the US District Court for the Eastern District of New York, against our Board members, Gautam Adani and Sagar Adani. The United States Department of Justice have also included our Board member, Vneet Jaain, in such criminal indictment. In light of these developments, our subsidiaries have presently decided not to proceed with the proposed USD denominated bond offerings," said Adani Green in a statement.

DEBT REDUCTION EFFORTS

The bribery allegations come at a time when the Adani Group has been actively working to reduce its debt and stabilise its financial position. In March 2023, the group prepaid Rs 7,374 crore in share-backed loans, pledging to eliminate all such financing by the end of the month to address concerns over its high leverage.

Recent fundraising efforts include a $1 billion qualified institutional placement (QIP) by Adani Energy Solutions in August 2024. This was aimed at reducing debt and investing in power infrastructure. In October 2024, Adani Enterprises raised $500 million through a share sale to fund new energy projects, develop a PVC plant, and reduce debt at its airport unit.

The group also plans to raise at least $1.5 billion through dollar bond issuances under Adani Green Energy and Adani Energy Solutions by early 2025. These funds are intended primarily for refinancing existing debt.