The crises facing the Indian Adani Group deepened after the credit rating was downgraded by two additional agencies, increasing the repercussions resulting from the US indictment of billionaire founder Gautam Adani in a $265 million bribery case.
According to the US indictment, most of these bribes were used to secure power purchase agreements in the Indian state of Andhra Pradesh, which prompted the state to consider suspending one of its deals related to the group.
This comes at a time when the group is witnessing continuous setbacks, as Moody’s lowered its rating on 7 companies affiliated with the group to “negative”, indicating that the accusations may weaken the group’s ability to access financing and increase capital costs.
Impact of accusations
Among the projects affected is a port development project in Sri Lanka. Government agencies there have announced that they are reviewing the repercussions of the accusations before making a final decision regarding cooperation with the group, according to Reuters.
The Sri Lankan Ministry of Finance explained that its decision will be based on the reports submitted to it by the relevant authorities.
Meanwhile, Fitch Ratings said it had placed Adani’s dollar bonds and rupee bonds on watch with a possible downgrade, stressing that this could affect the group’s debt prices. The affected bonds included entities such as Adani Energy Solutions and Adani Electricity Mumbai.
Financial losses and pressure on stocks
Since the accusations were announced, the group has lost $34 billion in market value within a few days, according to Reuters.
Adani Green Energy shares recorded the largest loss, falling by 7.3% on Tuesday, while shares of other companies such as Adani Wilmar fell by 2.3%.
The group’s plans were also affected by the French company Total Energies freezing its investments in Adani projects, confirming that there are no new financial commitments under discussion.
Ripple effects on financing and debt
Reports indicated that the Adani Group may face additional challenges in raising capital from foreign markets, which may lead to an increase in the cost of its debt. Although some Adani bonds witnessed slight stability and price increases on Tuesday, some have lost between 8 and 12 cents since news of the accusations broke.
The Adani Group denied all the accusations, whether in the criminal case or the civil case related to it, and stressed that it would take all legal measures to defend its reputation and interests, noting that the accusations included only one contract out of its total huge business.
The current case is not the first in which the Adani Group has faced accusations that threaten its standing; Last year, the group faced a report from Hindenburg Research alleging its misuse of offshore tax havens.
Although the group denied these allegations, the report caused a significant decline in its shares at the time.
Background on Adani
The Adani Group is an Indian multinational conglomerate, headquartered in Ahmedabad, Gujarat (western India). It was founded in 1988 by Gautam Adani, a prominent businessman and one of the richest people in India and the world.
Sectors in which Adani Group operates:
Infrastructure: development and operation of ports and airports.
- Energy: Electricity generation, including renewable energy (solar energy, wind energy) and traditional energy.
- Mining: Coal and mineral mining.
- Agriculture: agricultural commodity trading and warehousing management.
- Logistics services: sea and land transportation and warehousing.
- Gas and petrochemicals: natural gas exploration, production and distribution.
