Adani’s Indictment Costs Him Dearly, Evaporates Rs. 2.25 Lakh Crore. Can Modi’s Clout Extend To US And Donald Trump?

The Adani Group has found itself reeling from an indictment that has cost the conglomerate a staggering Rs. 2.25 lakh crore. This comes on the heels of a 20% drop in three of its most significant stocks, leading to one of its worst trading days since the Hindenburg Research report shook the group in early 2023.

The latest hit, linked to serious charges against Gautam Adani and other top executives, has sent ripples across global markets, affecting everything from stock prices to bond valuations.

Adani Enterprises, the flagship company, saw its shares plummet by 20%, closing at Rs. 2,256.20. Other major players within the group, like Adani Energy Solutions, Adani Ports, and Adani Green, also faced similar downturns, with their shares dropping by 20% as well.

The bloodbath wasn’t limited to stocks alone; the bond market also felt the tremors, with prices for Adani bonds falling sharply. The loss of over Rs. 2 lakh crore in market capitalization has certainly raised eyebrows, as the Adani Group struggles to recover from yet another scandal.

The billionaire’s personal wealth, too, took a massive hit. Gautam Adani’s net worth plummeted by a cool $10.5 billion, bringing his fortune down to $59.3 billion, according to Forbes’ Real-Time Billionaires List showing just how quickly fortunes can change in the world of business.

Indictment!

At the heart of this chaos are the charges filed in the United States, which paint a picture of serious financial misconduct. Gautam Adani, his nephew Sagar Adani, and other executives have been accused of conspiring to commit securities and wire fraud, including paying around $265 million in bribes to secure over $3 billion in loans and bonds. The charges involve false and misleading statements to investors and lenders, all part of a multi-billion-dollar scheme to secure contracts from global financial institutions.

In the indictment, prosecutors allege that Adani and his associates were involved in bribing Indian government officials to obtain lucrative energy contracts, and then hid these payments from lenders and investors to raise massive funds. The US authorities have taken a firm stance, with Deputy Assistant Attorney General Lisa H. Miller describing the actions as “corruption and fraud at the expense of US investors.”

The Great Impact

This is a big deal. The United States is no small player when it comes to global finance, and these charges, if proven true, could significantly impact Adani’s ability to raise funds, both in the US and globally. Moody’s Ratings has already warned that the indictment is “credit negative” for the group, highlighting the long-term implications for Adani companies.

For the Adani Group’s backers, including GQG Partners, which came to the rescue after the Hindenburg report, the news is also troubling. Shares of GQG, which has substantial exposure to Adani Group stocks, fell by 26% in Australia. The firm is now reviewing the situation, carefully considering whether any action needs to be taken regarding its portfolios.

So, where does this leave the relationship between India’s political powerhouses and the US legal system? Can Prime Minister Narendra Modi’s clout protect Adani, or will these charges tarnish the billionaire’s empire for good?

While Modi’s influence in India is undeniable, with his government often seen as a key supporter of the Adani Group, his power doesn’t seem to stretch as far as the US courtroom. The US authorities are not likely to be swayed by domestic political influence, and Adani may find himself facing the full force of international scrutiny. The case could also raise questions about the nature of business in India, with critics accusing the government of turning a blind eye to corruption if it means economic growth.

The big question now is how Adani and his group will handle this controversy. With a significant portion of his business empire under pressure, the billionaire may need to draw on more than just political connections to weather this storm. It’s not just about surviving the day’s market crash – it’s about restoring investor confidence and repairing the group’s battered reputation.

As the legal proceedings unfold, all eyes are on the unfolding events wondering whether this is the beginning of the end for one of India’s most prominent business magnates or if his empire will rise from the ashes once again. For now, though, the odds seem heavily stacked against him.