MUMBAI, India – Gautam Adani’s corporate empire suffered a devastating blow this week, with over $20 billion in market value wiped out after US authorities levelled corruption charges against the Indian billionaire.
The allegations have sent shockwaves through his businesses spanning infrastructure, ports, and power.
Adani Enterprises, the flagship entity of the conglomerate, saw its share price plunge by more than 20 per cent on Thursday, November 21, 2024, translating to nearly $9bn in lost value in a single day.
This came after the US Department of Justice and Securities and Exchange Commission (SEC) accused Adani of concealing a $265mn bribery scheme aimed at securing renewable energy deals.
Other listed Adani companies, including Adani Ports and Special Economic Zone, also faced sharp declines.
Adani Ports alone shed 13 per cent, amounting to a $4.5bn loss in market capitalisation. Power transmission and renewable energy subsidiaries reported similar losses, with their stocks down by a fifth.
Kenyan Infrastructure Deals Cancelled
The fallout extended beyond financial markets.
Kenyan President William Ruto announced in a national address the immediate cancellation of $2.6bn in agreements with Adani’s group.
The deals included a $1.85bn project to expand Nairobi’s international airport and a $736mn investment in power infrastructure.
“This decision is based on new information provided by our investigative agencies and partner nations,” Ruto stated, referencing the allegations outlined by US authorities.
The cancelled projects had already sparked public controversy in Kenya earlier this year, fuelling protests over perceived lack of transparency and rising taxes.
Adani’s ventures have been integral to India’s infrastructure push under Prime Minister Narendra Modi, but these recent developments have deepened the conglomerate’s challenges.
Adani Group Denies Allegations
The Adani Group issued a statement on Thursday categorically denying the accusations, calling the cases brought by US prosecutors “baseless” and indicating it was exploring legal options.
The charges also implicated Cyril Cabanes, a French national and former managing director at CDPQ, a Canadian pension fund that invested in Adani.
The SEC accused Cabanes of facilitating the alleged bribes.
CDPQ confirmed its co-operation with US investigators and said it terminated employees named in the indictment last year.
Cabanes, now at Trafigura as chief executive of MorGen Energy, has stepped back from his duties pending a review, according to the trading house.
“Neither MorGen Energy nor any Trafigura Group company is a party to these proceedings,” Trafigura stated.
Mounting Financial and Reputational Risks
Thursday’s dramatic stock rout and bond sell-offs threaten Adani’s efforts to rebuild its reputation following last year’s fraud allegations by Hindenburg Research, a US short-seller.
The group had recently begun a global relaunch to attract investors back to its fold.
As the allegations ripple through international markets, the impact on Adani’s standing and its ongoing projects is expected to be profound.
The group’s ability to regain investor confidence in the wake of this crisis remains uncertain.
