The Adani Group has called off its $600 million bond offering after the United States Department of Justice (DOJ) and Securities and Exchange Commission (SEC) accused its executives of orchestrating a $250 million bribery scheme.
The charges, which allege bribery of Indian officials to secure high-value solar energy contracts, caused a sharp decline in Adani’s U.S. dollar bonds during Asian trading, with some securities dropping as much as 15 cents. The group abandoned the bond sale just hours after it had been priced, citing the legal developments as the reason.
Key individuals implicated in the indictment include Gautam Adani, Sagar Adani, and Vneet Jaain, who have been accused of misleading investors while raising funds in U.S. markets.
Market Impact
The bribery allegations have led to a steep selloff in Adani Group stocks, with shares plummeting by up to 20%. Adani Green Energy, in particular, saw an 18% decline on the Bombay Stock Exchange (BSE). Bonds issued by Adani Green Energy in March 2024 also hit record lows, trading at 80 cents on the dollar, reflecting heightened investor concerns about the group’s governance and financial stability.
“While Adani weathered the Hindenburg allegations, these charges underscore persistent governance and regulatory risks,” commented Mohit Mirpuri, a fund manager at SGMC Capital in Singapore, speaking to Bloomberg.
This latest controversy adds to the challenges faced by the conglomerate, which has been under scrutiny since 2023 when the Hindenburg Research report accused it of stock manipulation and fraud, erasing $150 billion in market value.
Adani Green Energy’s Official Response
In a statement, Adani Green Energy acknowledged the charges:
“The United States Department of Justice and the United States Securities and Exchange Commission have issued a criminal indictment and brought a civil complaint, respectively, in the United States District Court for the Eastern District of New York, against our Board members, Gautam Adani and Sagar Adani. The United States Department of Justice has also included our Board member, Vneet Jaain, in such criminal indictment.”
The company further clarified that its subsidiaries had decided not to proceed with the proposed U.S. dollar-denominated bond offering in light of these developments.
The Adani Group now faces mounting pressure as it works to address investor concerns and stabilize its financial standing amidst the escalating legal and regulatory scrutiny.
