Adani Group faces potential funding challenges after US bribery indictment

Some global banks are reportedly weighing a temporary halt on fresh credit to the Adani Group, though they may continue servicing existing loans, sources told Reuters.

Bonds issued by the Adani Group tumbled for a second consecutive day on Friday, while some of the group’s shares stabilized after sharp declines on Thursday.

Senior officials at two global lenders to the Adani Group said internal discussions were underway to assess their exposure to the conglomerate and its financial vulnerabilities following the indictment.

Analysts noted that many banks and bond investors might now reevaluate their risk limits for the group, said the report.

US prosecutors allege that Adani and seven associates paid bribes to Indian government officials to secure contracts that could yield $2 billion in profits over 20 years, including for India’s largest solar power project.

In a parallel civil case, the US Securities and Exchange Commission (SEC) has accused the Adani Group of misleading investors.

The Adani Group has dismissed the allegations as “baseless” and vowed to pursue all legal options.

Broader implications for India's renewable energy sector

Analysts warned that the controversy could impact India’s renewable energy sector, potentially deterring global investors.

Nimish Maheshwari, an independent analyst on Smartkarma, told Reuters that India's renewable energy sector, which is also critical for global climate goals, may face reduced international investment due to this scandal.”

Investors may also demand enhanced transparency and due diligence, which could slow project financing, he added.

The Securities and Exchange Board of India (SEBI), the country’s market regulator, is conducting preliminary checks into whether Adani entities violated local market regulations by making inadequate disclosures, a SEBI official said.

Market and project fallout

While some Adani stocks recovered part of Thursday’s losses, the group’s combined market capitalization has plunged by $26 billion. The fallout has already disrupted major deals: Kenya recently canceled two Adani contracts, including a $2 billion airport modernization project and a $736 million energy transmission deal.

Adani Green Energy has also shelved a $600 million US bond sale.

US prosecutors claim Adani, his nephew Sagar Adani, and others bribed officials to gain business advantages in renewable energy ventures benefiting Adani Green Energy and Azure Power, a firm formerly listed on the New York Stock Exchange.

The indictment also accuses the group of making misleading public statements, including to US investors, despite knowing about the ongoing US investigation.

Silence from Adani

Gautam Adani has not appeared in public or commented on social media since the indictment, and his whereabouts remain unclear.

Indian authorities have yet to respond to opposition calls for a domestic probe into the matter. The indictment follows closely after Adani Enterprises and Adani Energy Solutions raised $1.5 billion through share sales earlier this year.