The Adani Group founded by Indian billionaire; Gautam Adani faced a significant setback as several of its dollar bonds experienced their sharpest decline in over six months.
This downturn followed reports that US prosecutors are widening their investigation into the conglomerate, focusing on potential bribery activities. Concurrently, most of the group’s shares also recorded losses.
Adani Ports & Special Economic Zone Ltd., a key unit of the conglomerate, saw its notes due in 2041 plummet by 2.4 cents, marking the steepest drop since August, to reach 79.1 cents.
Similarly, another bond from subsidiary Adani Renewable Energy RJ Ltd., maturing in 2039, fell by 2.3 cents to 83 cents, marking its worst decline since February 2023. These declines reversed gains made in recent months that had propelled the securities to their highest levels since 2022.
Amidst this turmoil, flagship Adani Enterprises Ltd. experienced significant declines, dropping by as much as 5%. Other groups of companies also saw their shares tumble by 3%-8% before partially recovering from these losses.
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What you should know
Despite the negative developments, Abhay Agarwal, founder and fund manager at Piper Serica Advisors, expressed confidence that the stocks would not experience a substantial correction.
- He noted while speaking to Bloomberg, “There has been enough scrutiny put on the group over the last year and there is now a lot of buying interest to cover any dips.”
US investigators are reportedly delving into allegations of potential bribery involving an Adani entity, including individuals linked to the company such as Gautam Adani.
- However, the Adani Group denied any wrongdoing, stating, “We are subject to and fully compliant with anti-corruption and anti-bribery laws in India and other countries.”
Although the US probe casts a shadow over the conglomerate, investor sentiment toward its firms has been gradually improving.
This is evidenced by the reduction of debt, the scaling back of founders’ share pledges, and the successful issuance of a dollar bond earlier this month. Despite these efforts, the combined market value of Adani Group’s listed firms remains below pre-allegation levels, highlighting lingering concerns among investors.