Table of Contents
- Adani Group Stock Crash: A Grim Day for Investors
- US SEC Charges: Allegations of Fraud and Bribery
- Impact on Adani’s Market Valuation and Wealth
- Credit Concerns Raised by Moody’s
- Adani Green Energy and Bond Withdrawal
- Details of US Indictment
- Conclusion: Adani Group’s Next Steps
Adani Group Stock Crash: A Grim Day for Investors
Shares of Adani Group companies witnessed sharp declines of up to 20% on Thursday following allegations of fraud and bribery against Gautam Adani and others by the US Securities and Exchange Commission (SEC). Key stocks, including Adani Enterprises, Adani Energy Solutions, and Adani Green Energy, hit their lower circuit limits, contributing to a collective loss of over Rs 2 lakh crore in market capitalization.
The plunge represents the group’s worst trading performance since the Hindenburg Research allegations in early 2023.
US SEC Charges: Allegations of Fraud and Bribery
The US SEC has charged Gautam Adani, his nephew Sagar Adani, and other executives with defrauding investors and bribing Indian officials to secure contracts for solar energy projects.
According to the indictment, the accused allegedly paid $265 million in bribes to secure $2 billion in profits over two decades. The charges include securities fraud, securities fraud conspiracy, and wire fraud conspiracy, with warrants issued for the arrest of Gautam Adani and Sagar Adani.
Impact on Adani’s Market Valuation and Wealth
As a result of the stock crash, the total market valuation of Adani Group’s 11 listed companies fell to Rs 12.3 lakh crore, representing a steep decline. Gautam Adani’s personal wealth dropped by $10.5 billion, reducing his net worth to $59.3 billion, as per Forbes’ Real-Time Billionaires List.
Credit Concerns Raised by Moody’s
In light of the allegations, Moody’s Ratings issued a statement highlighting concerns over the Adani Group’s governance practices and liquidity.
“The indictment is credit negative for the group. Our primary focus is on their ability to access capital for meeting liquidity requirements,” Moody’s stated.
Additionally, GQG Partners, a significant investor in Adani Group, experienced a 26% stock decline on the Australian exchange.
Adani Green Energy and Bond Withdrawal
Adani Green Energy canceled its $600 million bond offering following the recent developments. The proposed dollar-denominated bonds had been in the pricing stage, but escalating concerns prompted their withdrawal.
Adani’s dollar bonds also took a hit, with Adani Ports and SEZ bonds dropping by 3-5 cents, marking their steepest fall since February 2023.
Details of US Indictment
The US SEC alleges that Gautam Adani and others used deceptive practices to secure over $3 billion in loans and bonds, misleading investors with false statements. The indictment details bribes, code names like “Numero uno” for Gautam Adani, and fraudulent activities that extended across financial institutions and global markets.
“The scheme aimed to secure solar energy contracts through illicit means, misrepresenting financial health to investors,” prosecutors revealed.
Conclusion: Adani Group’s Next Steps
The latest allegations against Gautam Adani and his associates represent a significant challenge for the conglomerate. With global investors and regulatory agencies scrutinizing its governance and financial practices, the Adani Group must act decisively to restore market confidence.
The unfolding legal battle and its implications for the group’s business operations will be closely watched in the coming weeks.
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