Adani Shares Extend Losses After $27 Billion Rout on US Charges

Most shares and dollar bonds of Adani Group companies traded lower on Friday, extending declines driven by US prosecutors’ charges of bribery against founder Gautam Adani.

(Bloomberg) — Most shares and dollar bonds of Adani Group companies traded lower on Friday, extending declines driven by US prosecutors’ charges of bribery against founder Gautam Adani.

Flagship Adani Enterprises Ltd. slid as much as 7.3%, after plunging 23% on Thursday. Adani Ports & Special Economic Zone Ltd. fell 3.1%, extending the 14% loss in the previous session. Seven of the 10 firms controlled by the ports-to-power behemoth were in the red, while eight of group’s dollar notes dropped by more than 1 cent on the dollar.

Adani Group’s shares lost nearly $27 billion in market value Thursday after federal prosecutors accused its billionaire founder and other executives of allegedly plotting to bribe Indian government officials to win solar energy contracts. The conglomerate has denied the allegations, calling them baseless, and announced plans to seek legal recourse.

Despite its relatively low representation in the main equity gauges, the conglomerate’s woes have raised fresh doubts about corporate governance in the country. These new concerns compound existing worries about slowing earnings momentum, which have pushed the NSE Nifty 50 Index into correction territory and sparked a foreign fund exodus from the $4.4 trillion stock market.

“As an investor in Adani shares, I would like to sit on the fence and see which way this case goes,” said Alok Churiwala, managing director of Mumbai-based Churiwala Securities Pvt. Unlike retail investors who may hold out for a recovery, institutions face a challenge, as maintaining their stance could risk their investors’ capital, he said.

With strongholds in India’s ports, airports and power generation businesses, the Adani Group has become a proxy for the Modi government’s ambitions to develop world-class infrastructure. The billionaire denies getting political favors but says his conglomerate always aligns its business strategies to the policy priorities of the government, regardless of who is in power. 

The group survived a bruising selloff last year following short-seller Hindenburg Research’s report accusing Adani of corporate fraud. While India’s market regulator continues to investigate, the group’s fundraising efforts have won backing from some top money managers. 

—With assistance from Ameya Karve.