The indictment of Adani Group, its promoters and executives by the US authorities in an alleged Rs 2000-crore bribery case could negatively impact the fund-raising process of the Adani group.
Immediately after the charges of bribery became public, the renewable energy arm of the Adani Group -- Adani Green Energy – on Thursday scrapped a $600-million bond issue.
Experts told The New Indian Express that raising of funds through debt instruments could get negatively impacted as it depends on the company’s credit rating, which could get impacted by the bribery charges. Rating agency Moody's has already said the bribery charges could be credit negative.
According to Moody's, the indictment of Adani Group's chairman and other senior officials on bribery charges is credit negative for the group's companies.
"Our main focus when assessing Adani Group is on the ability of the group’s companies to access capital to meet their liquidity requirements and on its governance practices," the agency said in a statement.
If anything, the cost of funding would go up.
According to Shriram Subramanian, founder and managing director of InGovern Research Services, a proxy advisory firm, the borrowing costs for the Adani group are likely to increase by 200-300 basis points.
"Long-only equity investors will anyway stay away from investing in the stocks of the group due to the reputation issues," he said.
Some industry experts though say that given the Adani Group's earlier brush with controversies and its ability to come back strongly, the group will manage to find ways to raise funds, even if the cost of funds may go up.
"Given its ability to come back after each crisis, with the best example being the post-Hindenburg allegations, and chairman Adani's close proximity to the central government, the group may not find it difficult to mop up funds," said an executive from a rating agency.
He said the calling off of the $600-million fund-raise after a 3x oversubscription has only sentimental value.
"THe group's good cash flows, operational and executional ability will help it tide over this crisis too," he felt.
After the Hindenburg report in March 2023, Adani Energy Solution raised $1 billion through a QIP in August 2024 and a $500 million through a share sale by Adani Enterprises in October 2024.
The group also plans to raise at least $1.5 billion through dollar bond issuances under Adani Green Energy and Adani Energy Solutions by early 2025.
According to Jyoti Prakash Gadia, managing director at Resurgent India, an investment bank and a Sebi-registered merchant bank, the news about US authorities indictment of Adani group companies is likely to have a short-term impact on the market perception about the group with a possible immediate response of some of the investors and counter parties.
However, he says, the medium to long effect will depend upon the actual outcome of the legal cases about the accusations levied against the companies.
