Abu Dhabi’s IHC maintains outlook on Adani Group stakes as stocks rise sharply

INTERNATIONAL Holding Co’s (IHC) outlook on investments in India’s Adani Group remains unchanged, the Abu Dhabi conglomerate said following the US indictment of billionaire Gautam Adani, while the company’s shares rose strongly for a second day on Thursday (Nov 28).

“Our partnership with the Adani Group reflects our confidence in their contributions to the green energy and sustainability sectors,” IHC, one of the Indian business group’s key foreign investors, said in a statement on Wednesday.

“As with all our investments, our team continues to evaluate relevant information and developments. At this time, our outlook on these investments remains unchanged.”

Adani Green Energy shares rose 10 per cent on Thursday, hitting the cap set on gains in the stock in a single session for the second consecutive day.

Adani Energy Solutions was also up the maximum 10 per cent while Adani Total Gas, which has a cap of 20 per cent, gained about 15 per cent.

The Adani group’s stock losses have narrowed to US$12.5 billion from about US$34 billion, the low reached on Tuesday, following the US indictments levelled last week.

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Both houses of India’s parliament were suspended temporarily within minutes of opening on Thursday as opposition lawmakers disrupted proceedings for the third day this week demanding a discussion on the allegations against the Adani Group, one of the biggest conglomerates in the country.

Last week, US authorities accused Adani, his nephew and executive director Sagar Adani and the managing director of Adani Green, Vneet S Jaain, of being part of a scheme to pay bribes of US$265 million to secure Indian power supply contracts.

Five other Adani associates were charged with conspiring to violate the Foreign Corrupt Practices Act, a US anti-bribery law, and four were charged with conspiring to obstruct justice.

The ports-to-power conglomerate denied the charges as “baseless” and vowed to seek “all possible legal recourse”.

The government has not commented on the allegations against the group.

Many of India’s opposition parties accuse Prime Minister Narendra Modi and his Bharatiya Janata Party of favouring Gautam Adani and blocking investigations against him in India, charges both have denied.

Repercussions mount

In October last year, IHC boosted its stake in Adani Enterprises to more than 5 per cent after it sold down its investments in two other Adani companies. At the time, IHC said Adani Enterprises, the group’s flagship company, was “uniquely poised to capitalise on India’s robust growth journey”.

The increased investment came after short seller Hindenburg Research accused the conglomerate in January last year of stock manipulation and significantly high debt levels. Adani Group denied those allegations.

Adani Green, the company at the centre of the indictment, said on Wednesday Gautam Adani had been charged in the US for alleged violations of securities law and faced potential fines but had not been charged under the US Foreign Corrupt Practices Act.

In a stock exchange filing, Adani Green said a complaint by US regulator the Securities and Exchange Commission (SEC) sought “an order directing the defendants to pay civil monetary penalties (but) it does not quantify the amount of penalty”.

The civil action launched by the SEC runs in parallel to US federal prosecutors’ indictment against Adani and others.

Repercussions from the US indictments are starting to mount for the Adani Group with ratings agencies cutting some ratings and placing some of the company’s bonds on a negative outlook.

French oil major TotalEnergies, said on Monday it would not make any more investments in the Adani Group until there was clarity over the allegations and consequences. Total has a 20 per cent stake in Adani Green Energy and the Adani firm said there were no discussions on new investments underway.

Kenya has scrapped a US$2 billion procurement project that was to give Adani control of the country’s main airport and it shelved a 30-year, US$736-million public-private partnership, signed by Adani Energy Solutions, with its energy ministry in October.

Bangladesh is investigating power generation contracts signed under the previous prime minister, one of which was with Adani Power.

Sri Lanka said it would investigate all of the Adani-related projects in the island nation. REUTERS