Adani Group reports £43 billion loss following US fraud charges

• Vivek Mishra
• 27 November, 2024

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By: Vivek Mishra

INDIA’S Adani Group announced on Wednesday that it had lost nearly £43 billion in a stock market sell-off after US prosecutors accused its founder and other officials of fraud last week.

The indictment, issued on 20 November in New York, alleges that Gautam Adani, the billionaire founder, and several associates misled international investors as part of a scheme involving bribery. The charges include claims of a “scheme to offer, authorise, make, and promise to make bribe payments to Indian government officials.”

In response, the Adani Group denied the allegations in a statement, saying: “Since the intimation of the US DoJ (Department of Justice) indictment, the group has suffered a loss of near £43 billion in its market capitalisation across its 11 listed companies.”

Adani, 62, is accused of participating in a scheme involving £197 million in bribes to secure lucrative government contracts.

While describing the charges as “baseless,” the company stated that the indictment caused significant sell-offs of Adani stocks in Mumbai last week, with several trading halts recorded.

The group clarified on Wednesday that its officials are charged with securities fraud, wire fraud conspiracy, and securities fraud but not bribery or corruption. It said it was “incorrect” to suggest that Gautam Adani or his nephew Sagar Adani had been charged with bribery or corruption.

Following the statement, stocks in Adani Enterprises gained over 10 per cent in Mumbai, as did Adani Green Energy, the group’s renewable energy arm.

Adani, a close ally of Indian prime minister Narendra Modi, was once the world’s second-richest person. Critics have accused him of benefiting from their relationship.

The fallout has had significant repercussions for the group, including project cancellations and heightened scrutiny from investors and partners. In Kenya, President William Ruto announced that Adani would no longer participate in plans to expand the country’s electricity network and Jomo Kenyatta airport, projects valued at £1.46 bn.

Sri Lanka has also launched an investigation into the group’s investments, including a £348 million wind power project and a deep-sea port terminal in Colombo costing more than £551m.

The group has faced similar allegations in the past. In 2023, it lost £118 bn in market value following a report by Hindenburg Research accusing it of “brazen” corporate fraud. Adani denied the claims, calling the report a deliberate attempt to harm its reputation for the benefit of short-sellers.

Founded in 1988 by Gautam Adani, the conglomerate has expanded from coal to airports, cement, and media, despite concerns over its debt levels. CreditSights, a Fitch subsidiary, previously warned that the group was “deeply over-leveraged.”

Adani began his career in Mumbai’s gem trade after leaving school at 16, before establishing the flagship family business in Ahmedabad, Gujarat.