Adani Group companies wiped out $12.5 billion in market value on Friday after the US SEC asked a New York court to let it serve summons directly to Gautam Adani and nephew Sagar Adani via email. Shares tanked across the board, with Adani Enterprises dropping 10.65% and Adani Green Energy plunging up to 14.54%. The move revives fears tied to a US probe into alleged $265 million bribes for solar contracts.
SEC’s Push to Bypass India Sparks Sell-Off:
The SEC filed on January 21 in Brooklyn court after India’s Law Ministry twice rejected service requests through diplomatic channels. Rejections cited procedural snags like missing signatures and seals, which the SEC called unnecessary under Hague Convention rules. Regulators now consider email delivery and communication through US attorneys to be pointless. Adani Enterprises outperformed the Nifty 50 losers, closing down 10.65% at Rs 1,864.2. Intraday, Adani Green dropped 13.1%, while other stocks dropped 3.4% to 14.54%. The $12.5 billion loss, or around Rs 1.04 lakh crore, is the result of fresh concerns about the November 2024 US civil fraud action. The benchmark has been impacted by the decline of group companies like Adani Ports and ACC. In the wake of the SEC’s bold move, investors dropped shares, replicating the billion-dollar repercussions from the Hindenburg in 2023. Panic selling on legal clouds was indicated by a rise in trading volumes.
Roots in $265 Million Bribery Allegations:
Gautam Adani, chairman of Adani Green, and Sagar Adani, executive director, are the targets of the summons due to allegations that they concealed $265 million in bribery to Indian officials for solar power deals. According to US prosecutors, the plan misled investors about anti-bribery measures in order to achieve advantageous electricity purchases for Adani Green Energy. The plan is described in SEC filings, which claim that executives paid officials for billion-dollar contracts. Adani Group rejected the accusations as false and promised to pursue all legal avenues. The most recent filing received no response, while previous denials emphasized clean practices. India’s government avoided serving twice, first due to procedures and then because it questioned SEC jurisdiction, viewing it as a private US dispute. The SEC’s workaround is forced by this deadlock, raising the stakes in the cross-border conflict.
Market Reaction and Adani’s Defense Stance:
As news came out, panic spread throughout Dalal Street, causing Adani stocks to open weakly and accelerate losses. Adani Green hit 13.1%, while Adani Enterprises led the rout at 9.1% early. The group’s final total was $12.5 billion eliminated, highlighting its susceptibility to legal consequences in the US. Given Adani’s international debt and initiatives, analysts observe sensitivity to foreign investigations. The conglomerate, which included power and ports, recovered after Hindenburg but is still damaged. With an eye on the court’s decision for the upcoming volatility waves, this decline challenges recovery. Adani maintains his innocence and calls accusations false. Strong contest strategies that rely on Indian courts and public relations campaigns are similar to previous defenses. Speculation is fueled by quiet on the SEC’s email offer.
Implications for Adani Empire and Investors:
If the court approves the SEC’s email summons, Gautam and Sagar Adani face deeper involvement in US proceedings, opening doors to new disclosures and possible penalties. The active probe casts a shadow over fundraising efforts and key contracts, hitting hardest in the green energy space where the bribery claims focus. Investors now balance this procedural hurdle against bigger potential threats to the bottom line. India’s Law Ministry turning down service requests twice points to a tricky diplomatic dance in cross-border business cases. Adani’s heavy sway back home clashes with tough US oversight, which could spark tensions between regulators. Markets hang on court outcomes for direction, though Adani’s track record shows quick rebounds from these kinds of shocks. The repercussions weaken confidence in Indian companies that are growing internationally. Losing $12.5 billion in a single day highlights how authorities can target wealthy tycoons, causing valuations to plummet overnight. Adani’s handling of this scrap affects more than just one business; it challenges confidence in major players from rapidly expanding markets.
