Will the US indictment hurt Adani Group’s international fund raising plan?

The Adani Group, led by Gautam Adani, is under scrutiny after a US federal indictment accused the company and its executives of bribery and fraud. These allegations have raised concerns about the group’s governance and could impact its ability to raise funds internationally.
A federal indictment is a formal accusation by a grand jury, indicating that prosecutors have gathered enough evidence to pursue criminal charges.
In this case, the indictment accuses Gautam Adani and key executives of promising $250 million in bribes to Indian officials to secure energy contracts. These allegations fall under the Foreign Corrupt Practices Act (FCPA), which prohibits bribery and corruption involving US entities or international business deals.
The charges are significant but not equivalent to a conviction. The accused remain innocent until proven guilty in court.
Arrest warrants have been issued in the US for Adani and his nephew Sagar and prosecutors plan to hand those warrants to foreign law enforcement, court records show.
The Adani Group has strongly denied allegations of bribery and securities fraud levelled by US prosecutors against its chairman, Gautam Adani, and other key executives.
The group dismissed the charges as “baseless” and maintained that it operates with the highest standards of integrity and compliance. It further stated its intent to explore all possible legal remedies to address the accusations.
“As stated by the US Department of Justice itself, “the charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.” All possible legal recourse will be sought,” the Adani Group spokesperson said.
The indictment has already taken a toll on the Adani Group’s market performance. Shares of Adani companies fell between 10% and 20%, erasing over Rs 2 lakh crore from their market capitalisation. Dollar-denominated bonds issued by the group also saw steep declines, reflecting a loss of investor confidence.
In response to the allegations, Adani Enterprises withdrew a planned issuance of US dollar-denominated bonds. This decision suggests that the group is facing immediate challenges in accessing global capital markets, which are now likely to scrutinise its operations more closely.
US laws allow companies to settle bribery cases through mechanisms like Deferred Prosecution Agreements (DPAs) or Non-Prosecution Agreements (NPAs).
“Companies can resolve charges by paying fines, admitting certain wrongdoing, and improving compliance practices. Notable precedents, like Siemens ($800 million) and Ericsson ($1 billion), suggest Adani may pursue a settlement to cap reputational and financial losses,” said Narinder Wadhwa, Managing Director at SKI Capital.
Settlements typically involve:
“Substantial monetary penalties, enhanced compliance measures and independent monitoring, limited future restrictions, such as reduced access to US funding,” he added.
Past examples include Siemens, which paid $800 million, and Ericsson, which paid $1 billion to settle bribery allegations under similar circumstances. A settlement for Adani Group could involve:Settling could help the group stabilise its operations and rebuild investor trust, but it would come at a financial and reputational cost.
The allegations have highlighted vulnerabilities in the group’s governance. Even if the group reaches a settlement, it may face difficulties in raising funds internationally. Heightened scrutiny and increased borrowing costs could weigh on future projects and expansion plans.
This case brings corporate governance in large Indian conglomerates into focus. While it may raise questions about regulatory oversight, a prompt and transparent resolution could reassure global investors about India’s commitment to fair business practices.
“The market reaction has been severe, with Adani stocks plummeting 10-20% and its dollar bonds seeing sharp declines. Settling this issue could help stabilise investor sentiment, but the group will need to address governance concerns to rebuild trust,” said Narinder Wadhwa.
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