The Adani Group's dollar bond prices fell to near a one-year low on Monday as US charges against Indian billionaire Gautam Adani over an alleged $250 million bribery scheme continue to rattle investors.
“Some global banks and financial institutions are considering temporarily halting supply of fresh credit to the group,” said Karan Rijhsinghani, director at Atom Privé Wealth.
French oil giant Total Energies, which has a 20 per cent stake in Adani Green Energy, on Monday paused any new investment into Adani Group amid the allegations.
"Until such time when the accusations against the Adani group individuals and their consequences have been clarified, TotalEnergies will not make any new financial contribution as part of its investments in the Adani group of companies," the company said in a statement.
Beyond the immediate fallout for the Adani Group, some analysts say the crisis could have a wider-reaching and longer term negative impact on India's markets if not quickly resolved.
The latest allegations mark the second legal crisis for the Adani Group, led by Mr Adani as chairman and founder, in less than two years. The conglomerate was previously embroiled in fraud allegations by a US short-seller last year.
The new US charges have “significant implications for the Adani Group and the broader Indian market”, says Sonam Srivastava, founder and fund manager at Wright Research.
The news of Mr Adani's indictment caused the conglomerate's stocks and bonds to plunge on Thursday, wiping almost $30 billion off the group's market value. The group, with a market capitalisation value of about $150 billion, has interests from ports and airports to energy.
On Monday, some of Adani's stocks, including its flagship Adani Enterprises, moved into the green, but the share price is still around a one-year low.
Ms Srivastava said that there has been an “immediate negative market reaction” due to exposure to the conglomerate in the banking and energy sectors in India.
US federal prosecutors have accused Mr Adani, one of the world's richest men, and other executives of promising to pay Indian government officials $250 million in bribes to secure solar energy contracts. Prosecutors say Mr Adani and others hid the alleged corruption practices and used these contracts to raise money from US investors.
An Adani Group statement denied the allegations, describing them as “baseless” and saying it would seek “all possible legal recourse”.
Adani Green Energy, the company at the centre of the allegations, also suddenly scrapped a $600 million bond sale on Thursday.
“This move reflects immediate financial repercussions, as the group faces growing challenges in accessing global capital markets amid heightened scrutiny,” says Narinder Wadhwa, managing director and chief executive of SKI Capital.
He says the Adani Group could pursue a settlement in the US for the bribery and fraud case, which “could stabilise investor sentiment but may still impose significant financial and reputational costs”.
This would mean that “future capital-raising efforts, especially internationally, could remain challenging”, he adds.
“The case highlights governance concerns in large conglomerates but also offers an opportunity to reinforce regulatory oversight,” says Mr Wadhwa. “Prompt resolution might reassure investors about India’s commitment to addressing corporate malpractices.”
The development is undoubtedly a major setback for the Adani Group, which had been on a long road to recovery after it was accused by US short-seller Hindenburg Research in January 2023 of stock manipulation, accounting fraud, and improper use of tax havens.
The Adani Group denied all the allegations, issuing a 400-page rebuttal in response, but the accusations resulted in a crisis for the conglomerate.
It resulted in $150 billion being wiped off the market value of its companies last year.
An inquiry by India's market regulator continues.
Manish Chowdhury, head of research at online broker StoxBox, remains optimistic that the Adani Group can navigate its way through the latest crisis.
“The magnitude of allegations and corporate governance issues [are] seemingly not comparable to the earlier Hindenburg allegations,” Mr Chowdhury says.
“While some analysts view the market reaction as a short-term response, the long-term outlook will depend on the legal proceedings' outcomes and the group's ability to restore investor confidence,” says Ms Srivastava.
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
About Takalam
Date started: early 2020
Founders: Khawla Hammad and Inas Abu Shashieh
Based: Abu Dhabi
Sector: HealthTech and wellness
Number of staff: 4
Funding to date: Bootstrapped
LILO & STITCH
Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders
Director: Dean Fleischer Camp
Rating: 4.5/5
Pharaoh's curse
British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.
Fitness problems in men's tennis
Andy Murray - hip
Novak Djokovic - elbow
Roger Federer - back
Stan Wawrinka - knee
Kei Nishikori - wrist
Marin Cilic - adductor
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
Desert Warrior
Starring: Anthony Mackie, Aiysha Hart, Ben Kingsley
Director: Rupert Wyatt
Rating: 3/5
One in nine do not have enough to eat
Created in 1961, the World Food Programme is pledged to fight hunger worldwide as well as providing emergency food assistance in a crisis.
One of the organisation’s goals is the Zero Hunger Pledge, adopted by the international community in 2015 as one of the 17 Sustainable Goals for Sustainable Development, to end world hunger by 2030.
The WFP, a branch of the United Nations, is funded by voluntary donations from governments, businesses and private donations.
Almost two thirds of its operations currently take place in conflict zones, where it is calculated that people are more than three times likely to suffer from malnutrition than in peaceful countries.
It is currently estimated that one in nine people globally do not have enough to eat.
On any one day, the WFP estimates that it has 5,000 lorries, 20 ships and 70 aircraft on the move.
Outside emergencies, the WFP provides school meals to up to 25 million children in 63 countries, while working with communities to improve nutrition. Where possible, it buys supplies from developing countries to cut down transport cost and boost local economies.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
UAE SQUAD
Omar Abdulrahman (Al Hilal), Ali Khaseif, Ali Mabkhout, Salem Rashed, Khalifa Al Hammadi, Khalfan Mubarak, Zayed Al Ameri, Mohammed Al Attas (Al Jazira), Khalid Essa, Ahmed Barman, Ryan Yaslam, Bandar Al Ahbabi (Al Ain), Habib Fardan, Tariq Ahmed, Mohammed Al Akbari (Al Nasr), Ali Saleh, Ali Salmin (Al Wasl), Adel Al Hosani, Ali Hassan Saleh, Majed Suroor (Sharjah), Ahmed Khalil, Walid Abbas, Majed Hassan, Ismail Al Hammadi (Shabab Al Ahli), Hassan Al Muharrami, Fahad Al Dhahani (Bani Yas), Mohammed Al Shaker (Ajman)
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
