Adani Group Faces Scrutiny Amid Bribery Allegations and Bond Downgrades
The Adani Group is under heightened scrutiny following allegations of bribery and subsequent actions by credit rating agencies. Sri Lanka is reviewing accusations against the conglomerate as U.S. prosecutors indicted founder Gautam Adani, his nephew Sagar Adani, and others for their alleged roles in a $265-million bribery scheme to secure Indian power contracts.
The allegations have implications for Adani’s ventures in Sri Lanka, where Adani Ports holds a 51% stake in a Colombo container terminal project set to begin operations in 2024. Sri Lanka’s finance and foreign ministries are evaluating the situation, including the project’s future, but a timeline for conclusions remains unclear.
The fallout also extends to credit markets. Fitch Ratings placed several Adani Group bonds under “watch negative,” signaling potential downgrades. This affects Adani Ports, Adani Electricity, and Adani Energy Solutions’ rupee and dollar bonds. Fitch cited concerns over funding access and credit spreads, while S&P Global issued downgrade warnings for Adani Ports and Adani Green Energy.
Adani stocks have suffered significant market losses, with the group’s valuation dropping by $33 billion since the indictments. Adani Green Energy alone has lost $9.7 billion, and its shares fell an additional 7.5% on Tuesday.
International partners are distancing themselves. French oil giant TotalEnergies has paused financial contributions to Adani-related investments, though Adani Green stated this decision would not affect its operations or growth plans. However, investment firm GQG Partners, which holds nearly 20% in Adani companies, reaffirmed support, though it warned that funding access could be constrained by the allegations.
Despite recent turmoil, Adani dollar bonds showed slight recovery after days of sharp declines, with prices rising by up to 1.5 cents. However, ESG rating firm Morningstar Sustainalytics announced it would reassess Adani Green Energy’s governance risks.
The Adani Group denies the allegations, calling them “baseless,” and plans to pursue legal remedies. The situation continues to evolve, with potential implications for Adani’s financial stability, operational credibility, and government relations.
