US prosecutors have expanded their investigation into India’s Adani Group, exploring potential bribery allegations and examining the actions of the company’s billionaire founder, as reported by individuals familiar with the matter, reports Bloomberg.
The inquiry is delving into whether any Adani entity, including individuals associated with the company like Gautam Adani, may have participated in offering inducements to Indian officials for advantageous treatment in relation to an energy project. The investigation is also scrutinizing Indian renewable energy firm Azure Power Global Ltd.
The investigation into the Adani Group and Azure Power Global Ltd. is being led by the Eastern District of New York and the Justice Department’s fraud unit.
Adani Group asserts unawareness of any investigation against Gautam Adani, affirming compliance with anti-corruption laws. No charges have been filed against Gautam Adani, the Adani Group, or Azure Power Global Ltd.
The investigation is concentrating on whether there were payments made to officials in India, while the Justice Department has been examining the actions of Gautam Adani.
The Foreign Corrupt Practices Act (FCPA) allows US prosecutors to pursue foreign corruption allegations if there are specific ties to American investors or markets, even if the company, such as Adani Group, does not conduct trading activities in the US but has American investors.
Adani Group told Bloomberg News that they have no knowledge of any investigation involving their chairman.
The GQG Partners Emerging Markets Equity Fund holds approximately $2.23 billion invested across seven Adani companies, with $1.06 billion allocated to Adani’s energy and utility sectors. GQG Partners’ investment in Adani Group companies has reportedly multiplied by five, from an initial $1.9 billion in March to a value of $10 billion due to market gains and additional stakes. Sudarshan Murthy, the fund manager, mentioned that the firm’s investment in Gautam Adani’s conglomerate has surged from $1.9 billion to about $4.3 billion within 10 months, representing a 130% increase, according to calculations by Bloomberg.
Adani Group’s dollar bonds experienced their most significant decline in over six months following reports that US prosecutors are expanding their investigation of the conglomerate, specifically focusing on potential bribery activities. Additionally, the majority of the group’s shares saw a decline in value.
A bond issued by Adani Ports & Special Economic Zone Ltd. maturing in 2041 dropped by 2.4 cents, marking its most significant decline since August, to reach 79.1 cents. Another bond from the subsidiary Adani Renewable Energy RJ Ltd. due in 2039 decreased by 2.3 cents, hitting 83 cents, its most substantial decrease since February 2023. These declines offset the recent months’ gains that had propelled the securities to their highest levels since 2022.
Abhay Agarwal, founder and fund manager at Piper Serica Advisors, stated, “I anticipate minimal stock corrections due to this development. The group has faced substantial scrutiny over the past year, and there is currently significant buying interest to counteract any potential declines.”
(With the inputs from Bloomberg)
