Adani Group reports nearly US$55 billion loss following US fraud charges

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

The charges, made on 20 November, have led to global repercussions, including project cancellations and market fallout.

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

Adani Group has firmly denied the accusations, describing them as “baseless,” but the allegations triggered a steep sell-off in Adani stocks in Mumbai.

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

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

Global Fallout

The fallout extends internationally, with Kenya cancelling Adani’s US$2.6 billion investments in Jomo Kenyatta Airport and the state utility KETRACO.

Sri Lanka also launched investigations into Adani-led projects, including a US$442 million wind power deal and a US$700 million deep-sea port terminal in Colombo.

Singapore’s Limited Exposure

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

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

“Banks have in place measures to review and manage their exposures to borrowers and counterparties,” an MAS spokesperson said.

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

In February 2023, reports indicated that Singapore investment firm Temasek, through its subsidiary Camas Investments, held a small stake of just over 1.2 per cent in India-listed Adani Ports and Special Economic Zone.

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

Earlier, in October 2022, it was reported that Adani was in preliminary discussions with investors, including Temasek and Singapore sovereign wealth fund GIC, to 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, at one point, was the world’s second-richest man.

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

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

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

In 2023, the conglomerate lost US$150 billion in market value following a report by short-seller Hindenburg Research, which accused it of “brazen” corporate fraud.

Adani strongly denied the allegations, labelling the report a “deliberate attempt” to harm 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, beginning with export trade and later expanding into a multi-sector conglomerate.