Why Adani Stocks are falling : Complete story behind it

In June of 2020, a renewable energy company owned by Indian billionaire Gautam Adani won what it called the single largest solar development bid ever awarded: an MOU for the provision of 8GW power to a state-owned power firm.

But there was a problem. The local power companies were reluctant to pay the prices which the state company was insisting on, thus derailing the deal, as said US authorities. To continue with the deal, Adani allegedly resorted to bribing the local officials in a bid to force them to purchase the electricity.

One of those accusations is the basis of the US criminal and civil charges unsealed on Wednesday against Adani, a prominent businessman who is not in US custody at the moment and may be in India. His Adani company declared detentions saying that the charges against it were “baseless” and would pursue “all legal means of action”.

Known bribery as high as ‘’hundreds of millions of dollars’’ to local Indian officials interested the US Justice Department and the Securities and Exchange Commission because Adani’s various companies were sourcing funds from US-based investors in several transactions from 2021.

The following chronology of how the alleged scheme worked is inferred from a 54-page criminal indictment of Adani and seven of his associates by federal prosecutors and two parallel civil complaints by the SEC that quote messages exchanged amongst the alleged participants copiously.

Azure Power Global loses that contract together with Adani Green Energy early 2020 to construct a 12-gigawatt solar energy project whereby the projects would generate billions of dollars in revenues for both companies as indicated

It proved to be a significant leap for Adani Green Energy which is headed by Sagar Adani who is Adani’s nephew. Before that, the company had made less than $50mln in its history and still had no net income, the SEC complaint stated.

However the initiative received numerous constraints, The constraints limited the effectiveness of the initiative as the following; Local state electricity distributors hesitated to sign PPAs to purchase the new developed solar power anticipating future price drops, according to the Institute of Energy Economics and Financial Analysis, an Analyst think tank in the report dated April 7, 2021.

Using the encrypted messaging app, WhatsApp, the SEC claimed that on 9 November 2020, Sagar Adani and the then Azure CEO discussed the delays and suggested bribes.Three days later the Azure CEO wrote, Local power cos are being motivated ; to which Sagar Adani allegedly responded: Yup…but the optics are very difficult to cover. According to a February 2021 letter from Sagar Adani to the CEO In February 2021, Mr. Sagar Adani has written to the CEO “Want you to know that we have made it a point to give more than double incentives for these acceptances.”

The SEC’s complaint doesn’t name the Azure CEO as a defendant, although Azure’s public filings identify the CEO at the time as Ranjit Gupta.

Gupta was indicted by the Justice Department on the charge of conspiracy to violate an anti-bribery law. He has not yet given his response to comment.On Thursday, Azure said that, while it was working with the US authorities on the investigations, the individuals charged with the accusations are no longer affiliated with the firm, having left over a year ago.

SUDDEN FORTUNE for Adani Stocks

In August of 2021, Gautam Adani had the first of several meetings with an official in the southern state of Andhra Pradesh, to whom he allegedly ultimately promised $228 million in bribes in exchange for agreeing to have the state buy the power, as per the Justice Department’s indictment.

In December other states with small contracts also came forward and agreed to buy the power which was being generated by Jairroft. Other states’ officials were given similar assurances, according to the US authorities.

At a coffee shop meeting held on Dec 6, 2021, Azure’s executives reportedly discussed allegations that the Adanis had in some way “Enabled signing” of the deals, the SEC stated.

Gautam Adani, the group’s chairman and founder, said this on December 14, 2021, and added that the company intends “to become the world’s largest renewables player by 2030.”

The sudden changes in fortunes for Azure and Adani Green fuelled speculation in the market around the contract awards, the SEC wrote in its complaint.

LETTER FROM THE SEC

Not long thereafter, the SEC started investigating. The agency said it sent Azure, which at the time was listed on the New York Stock Exchange, a “general inquiry” letter on March 17, 2022, seeking recent contracts and whether any foreign officials sought anything of value, as the Justice Department laid out in the indictment.

The Department of Justice alleges that Gautam Adani revealed in a meeting in his office in Ahmedabad India the following month that he wanted his company Azure to be reimbursed more than $ 80 million for the bribes given to officials for the benefit of Azure’s contracts.

From the DoJ, Gautam Adani is reported to have informed representatives of Azure who visited his office in Ahmedabad, India the following month, that for the alleged bribes he had made to officials regarding contracts that would favor Azure, he was owed more than $80 million.

Certain Azure representatives and some of the leading investors in the company’s project used their position to write Adani his company’s pass to win a potentially lucrative project. Prosecutors said the representatives and the investor were to convince Azure’s board of directors that Adani had demanded bribe money while secretly participating in the fraud.

At the same time, Adani’s various outfits mortgaged billions of dollars in loans and bonds from these same global banks and, yes, U.S. investors as well. Before the bribing occurred, in four capital raises between 2021 and 2024, the companies provided documentation noting they had not paid bribes claims prosecutors said are fraudulent.

FBI SEARCH on Adani Case

As stated on March 17, 2023, agents of the Federal Bureau of Investigation removed all gadgets from Sagar Adani’s possession. The agents gave him a search warrant from a judge stating that the US government was seeking for evidence of violating fraud laws and the FCPA.

As the prosecutors told, Gautam Adani emailed himself photos of each page of the search warrant on March 18, 2023.

His companies, however, entered into a $1.36 billion syndicated loan agreement on Dec. 5, 2023, another sale of secured notes in March 2024 and provided investors with more false and misleading statements on their anti-bribery measures, state prosecutors

On Oct. 24, federal prosecutors in Brooklyn, obtained a secret grand jury indictment against Gautam Adani, Sagar Adani, Gupta, and five others allegedly involved in the scheme.

An indictment was unveiled on Nov. 20, which led to the decline of Adani Group firms’ market capitalization by $27bn. Only 48 hours after this announcement Adani Green Energy pulled out of a planned $600 million bond issue.

Adani Group stock list

The Adani group on the similar basis is a significant conglomerate of India having interest in sectors for instance ports, energy, logistics, green energy and many more. Below is a list of prominent Adani Group companies that are publicly traded in the Indian stock market as of recent years:

Adani Group Listed Companies:

Adani Enterprises Limited also known as Adani group

The largest Indian conglomerate and a major integrated infrastructure player in sectors like trading, logistics construction & power generation.

Adani green energy Limited (AGEL)

Specialized in independent power production specifically in renewable energy such as solar and wind energy.

Adani Ports and Special Economic Zone Ltd.

Concerns itself with operations of ports, terminals and logistics.

The Adani Transmission Limited (ATL)

Specializing in power transmission, and distribution of family power.

Adani Power Limited (APL)

The company is in the business of generating thermal power.

Adani Total Gas Limited (ATGL).

Company has prominence on city gas distribution whereby it partners with Total Energies.

Adani Wilmar Limited (AWL)

An associate company of Wilmar International Ltd., having business interest in edible oil and food segment.

NDTV (New Delhi Television Limited); Media: was acquired by Adani Group.

A media company as part of diversification from the group into broadcasting.

Ambuja Cements Limited

Manufacturer of cement used by the Adani Group through acquisition.

ACC Limited

One of the other giant cement makers coming under the house of Adani.

These stocks are NASDAQ, NSE and BSE stocks that are listed in the Indian stock exchanges. As a rule, such a decision should be taken carefully after investigating the offers or consulting with a financial expert.

Will Adani Stocks Recover ?

For now the bloodbath of Adani Stocks is looking halted. Some stocks are recovering slowly and some are still trying to gain momentum. Even though none of the allegations were proved, the Kenya Government has officially terminated the partnership between them and Adani to build for International Airport deal worth $2.5B. It is very hard to predict the recovery of any of the stocks related to Adani for now. Retail Investors started buying today and Adani Ent. Shown growth of 2.8%. Currently it is not recommended to enter the Adani Stocks.

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