Adani Group under fire: bribery claims lead to market turmoil
ECONOMY & POLICY

Adani Group under fire: bribery claims lead to market turmoil

In Mumbai, a year after Hindenburg's claims stirred Gautam Adani's business empire, news surfaced of US authorities investigating a bribery allegation that has affected the influential business group. Stocks and bonds of Adani companies experienced a decline following reports that US prosecutors had expanded their investigation to examine potential involvement of an Adani company, including group chairman Gautam Adani, in a payoff to officials in India for favourable treatment on an energy project.

This development led to a collective loss of approximately Rs 255 billion in market capitalisation for Adani companies by the end of Monday's trading session. Dollar bonds of various Adani group companies, such as Adani Green, Adani Ports and Special Economic Zone, Adani Transmission, and Adani Renewable Energy RJ Ltd, slipped around 2%, eroding recent gains.

According to US laws, federal prosecutors are authorised to investigate foreign bribery and corruption allegations if they have links to American investors and markets. Such inquiries can potentially impact future debt-raising prices in international markets.

A senior debt market official commented, "The recent investigation news follows renewed investor confidence seen when Adani Green Energy raised $409 million after a year marked by Hindenburg's allegations of fraud and stock manipulation. While the dollar bonds recovered in the second half of the day, the market would closely track the papers."

Although Adani stocks have rebounded since the release of the Hindenburg report on 25 January 2023, six of the group's stocks are still trading below their pre-Hindenburg prices. On Monday, Adani Total Gas experienced the most significant decline, dropping 4.2% to close at Rs 947.25, while Adani Energy Solutions fell 3.5% to Rs 1,009. Shares of Adani Enterprises, the group flagship, decreased by 0.5%, while shares of Ambuja Cements, ACC, NDTV, and Adani Wilmar declined by more than 2%.

Since 2 February 2023, the group's market capitalisation has surged by over Rs 88 trillion. However, Monday's market cap of Rs 155.1 trillion was Rs 36.9 trillion lower than the high of 24 January 2023.

In Mumbai, a year after Hindenburg's claims stirred Gautam Adani's business empire, news surfaced of US authorities investigating a bribery allegation that has affected the influential business group. Stocks and bonds of Adani companies experienced a decline following reports that US prosecutors had expanded their investigation to examine potential involvement of an Adani company, including group chairman Gautam Adani, in a payoff to officials in India for favourable treatment on an energy project. This development led to a collective loss of approximately Rs 255 billion in market capitalisation for Adani companies by the end of Monday's trading session. Dollar bonds of various Adani group companies, such as Adani Green, Adani Ports and Special Economic Zone, Adani Transmission, and Adani Renewable Energy RJ Ltd, slipped around 2%, eroding recent gains. According to US laws, federal prosecutors are authorised to investigate foreign bribery and corruption allegations if they have links to American investors and markets. Such inquiries can potentially impact future debt-raising prices in international markets. A senior debt market official commented, The recent investigation news follows renewed investor confidence seen when Adani Green Energy raised $409 million after a year marked by Hindenburg's allegations of fraud and stock manipulation. While the dollar bonds recovered in the second half of the day, the market would closely track the papers. Although Adani stocks have rebounded since the release of the Hindenburg report on 25 January 2023, six of the group's stocks are still trading below their pre-Hindenburg prices. On Monday, Adani Total Gas experienced the most significant decline, dropping 4.2% to close at Rs 947.25, while Adani Energy Solutions fell 3.5% to Rs 1,009. Shares of Adani Enterprises, the group flagship, decreased by 0.5%, while shares of Ambuja Cements, ACC, NDTV, and Adani Wilmar declined by more than 2%. Since 2 February 2023, the group's market capitalisation has surged by over Rs 88 trillion. However, Monday's market cap of Rs 155.1 trillion was Rs 36.9 trillion lower than the high of 24 January 2023.

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