Adani Group’s Market Loss
India’s Adani Group announced a staggering loss of nearly $55 billion in market capitalisation following accusations of fraud by US prosecutors. The loss stems from a stock market rout after a bombshell indictment on November 20, 2024, which accused Gautam Adani and other officials of deliberately misleading investors and engaging in bribery to secure government contracts.
US Fraud Charges Against Adani Group
The US Department of Justice (DoJ) indictment claimed that Adani and several subordinates participated in a $250 million bribery scheme, offering and promising bribes to Indian government officials to secure lucrative contracts.
Adani Group, however, has strongly denied these allegations, calling them “baseless.” The conglomerate emphasized that neither Gautam Adani nor his nephew Sagar Adani faced charges of bribery or corruption, despite the accusations related to securities fraud and wire fraud conspiracy.
Stock Market Reactions and Recovery
Following the indictment, Adani Group stocks in Mumbai saw a sharp decline, triggering several trading halts. However, after the company’s denial statement, stocks such as Adani Enterprises and Adani Green—the group’s renewable energy arm—experienced a significant surge, with an increase of over 10% in their share prices.
Global Impact on Adani Group’s Projects
The fraud allegations have triggered global repercussions for Adani Group. Key projects in Kenya have been cancelled, including the $1.85 billion expansion of Jomo Kenyatta Airport and a $736 million investment in KETRACO, Kenya’s state-owned utility.
Additionally, Sri Lanka has launched an investigation into the group’s local investments, including a $442 million wind power project and a $700 million port terminal in Colombo. The group’s international projects are now under scrutiny as a result of the scandal.
Previous Allegations and Market Reactions
This is not the first time Adani Group has faced serious fraud allegations. In 2023, a report by short-seller Hindenburg Research accused the conglomerate of engaging in corporate fraud, resulting in a $150 billion market value loss.
Despite the scrutiny, Adani Group has denied all allegations and described the Hindenburg report as a deliberate attempt to damage its reputation for the benefit of short-sellers.
Adani Group’s Expansion and Financial Challenges
The Adani Group’s rapid expansion into capital-intensive industries, such as coal, airports, cement, and media, has raised concerns about its financial stability. In 2022, CreditSights, a Fitch subsidiary, warned that the group was over-leveraged and at significant financial risk due to its growing debt.
Background of Gautam Adani
Gautam Adani, born to a middle-class family in Ahmedabad, Gujarat, started his career in Mumbai’s gem trade after dropping out of school at the age of 16. He founded the Adani Group in 1988, initially focusing on export trade, and rapidly expanded the conglomerate into multiple sectors, becoming one of the richest men globally at his peak.
Conclusion: Ongoing Challenges for Adani Group
The ongoing fraud allegations and financial setbacks could pose long-term challenges for Adani Group. With significant international projects at risk and market volatility, the conglomerate faces heightened scrutiny. As the situation unfolds, both investors and industry observers will closely watch the group’s efforts to regain stability and rebuild its reputation.
