Adani Group reports losses of nearly $55 billion following US fraud allegations

NEW DELHI, INDIA: India’s Adani Group has reported a loss of nearly US$55 billion in the market capitalization of its 11 listed firms following a US Department of Justice (DoJ) indictment. accusing founder Gautam Adani and other officials of fraud.

The allegations, made on November 20, led to global repercussions, including project cancellations and market effects.

The indictment alleges that the billionaire industrialist and his associates engaged in a bribery scheme, “misleading international investors” to secure lucrative government contracts.

Adani Group strongly denied the allegations, calling them “baseless”, but the allegations triggered a steep sell-off in Mumbai-based Adani shares.

Despite a slight 1.8% recovery in Adani Enterprises shares on Wednesday (November 27), the group’s flagship company has lost more than 20% of its value since the indictment.

In a statement, the Adani Group clarified that the charges against its officials are limited to securities fraud and conspiracy to commit wire fraud, denying allegations of bribery.

Global fallout

The impact extends internationally, with Kenya cancels Adani’s $2.6 billion investment in Jomo Kenyatta Airport and at the state utility KETRACO.

Also Sri Lanka launched investigations in Adani-led projects including a $442 million wind venture and a $700 million deepwater port terminal in Colombo.

Singapore’s limited exposure

In response to questions from the state media The Straits TimesThe Monetary Authority of Singapore (MAS) confirmed on November 25 that the country’s exposure to the Adani Group remains limited, with the overall exposure of local banks described as small.

MAS emphasized that banks have measures to manage risks from borrowers and counterparties.

“Banks have put measures in place to review and manage their exposures to borrowers and counterparties,” a MAS spokesman said.

The Adani Group has been operating in Singapore for over two decades, using the local office as a hub for its Southeast Asian operations.

In February 2023, reports indicated that Singaporean investment firm Temasek, through its subsidiary Camas Investments, held a small stake of just over 1.2% in Listed Adani Ports in India and the Special Economic Zone.

However, Temasek relinquished this position later in 2023 and currently has no investment in Adani, as confirmed by public documents on the Adani Ports website.

Previously, in October 2022, it was reported that Adani has been in preliminary talks with investors including Temasek and Singapore sovereign wealth fund GICto raise at least US$10 billion for its expansion into clean energy, ports and cement businesses.

Historical controversies

At 62, Gautam Adani is a close ally of Hindu nationalist Prime Minister Narendra Modi and was once the world’s second-richest man.

Critics have long accused him of improperly benefiting from their relationship.

Currently ranked as the 22nd richest person in the world and the second richest person in India, Adani has an estimated net worth of $69.8 billion, according to the data. Forbes.

His business empire spans industries including coal, airports, cement and media, and the Adani Group has faced previous allegations of corporate fraud.

In 2023, the conglomerate lost $150 billion in market value following a short seller report Hindenburg Researchwhich accused her of “disclosed” corporate fraud.

Adani has strongly denied the allegations, labeling the report a “deliberate attempt” to damage the group’s reputation for the benefit of short sellers.

The group’s rapid expansion into capital-intensive sectors has previously raised concerns, with Fitch subsidiary CreditSights warning in 2022 that the conglomerate was “deeply over-leveraged”.

Born into a middle-class family in Ahmedabad, Gujarat, Adani left school at 16 and moved to Mumbai, where he entered the gem trade.

After a brief stint in his brother’s plastics business, he launched the Adani Group in 1988, starting with the export trade and then expanding into a multi-sector conglomerate.