Indian conglomerate Adani Group said Wednesday it has lost nearly $55 billion in a stock market meltdown since U.S. prosecutors last week charged its founder and other officials with fraud.
The explosive Nov. 20 indictment in New York accused billionaire industrialist founder Gautam Adani and several of his subordinates of deliberately misleading international investors as part of a bribery scheme.
He said they had “designed a scheme to offer, authorize, pay and promise to pay bribes to Indian government officials.”
The company, which denies these accusations, said in a statement on Wednesday: “Since the announcement of the indictment from the US DoJ (Department of Justice), the group has suffered a loss of nearly $55 billion. of its market capitalization through its 11 listed companies. “
Gautam Adani, 62, is suspected of participating in a $250 million bribery scheme aimed at securing lucrative government contracts.
Adani Group issued a categorical denial, calling the accusations “baseless”, but it triggered a sharp sell-off in Adani shares in Mumbai last week, with multiple trading halts.
Shares of Adani Enterprises rose 1.8% on Wednesday, but the group’s key company has lost more than 20% of its market capitalization since the indictment was published.
A statement released Wednesday said Adani officials are “solely charged” with securities fraud, wire fraud conspiracy and securities fraud. He denies all accusations.
He said it was “incorrect” to say that Gautam Adani or his nephew Sagar Adani had been accused of bribery or corruption.
Adani is a close ally of Hindu nationalist Prime Minister Narendra Modi and was at one point the world’s second-richest man. Critics have long accused him of taking undue advantage of their relationship.
“Significant repercussions”
The group said the action had “significant repercussions,” including “international project cancellations, impact on financial markets and sudden scrutiny from strategic partners, investors and the public.”
This is particularly the case in Kenya, where President William Ruto declared that the Adani group would no longer be involved in plans to expand the East African country’s electricity network and its main airport.
The Adani Group was to invest $1.85 billion in Jomo Kenyatta Airport and $736 million in state-owned utility KETRACO.
Sri Lanka has launched an investigation into the group’s local investments, including a $442 million wind power deal and an Adani-led deep-water port terminal in Colombo, estimated to cost more than $700 million. dollars.
With a business empire spanning coal, airports, cement and media, the Adani Group has weathered previous allegations of corporate fraud and suffered a similar stock market debacle last year.
The conglomerate saw $150 billion wiped from its market value in 2023 after a report from short seller Hindenburg Research accused it of “brazen” corporate fraud.
Adani denied Hindenburg’s allegations and called his report a “deliberate attempt” to damage its image for the benefit of short sellers.
The Adani Group’s rapid expansion into capital-intensive businesses has raised alarms in the past, with Fitch subsidiary and market researcher CreditSights warning in 2022 that it was “deeply overleveraged”.
Adani, born into a middle-class family in Ahmedabad, Gujarat state, dropped out of school at 16 and moved to Mumbai to find work in the financial capital’s lucrative gem trade.
After a brief stint in his brother’s plastics company, in 1988 he launched the flagship family conglomerate that bears his name by diversifying into exports.