A Tale of Two Reactions
Gautam Adani's business empire is facing a storm of controversy, with allegations of bribery swirling around the Indian tycoon. While some major players are distancing themselves from the Adani Group, others remain steadfast in their support. This creates a fascinating picture of a high-stakes battle between reputational risk and financial opportunity.
Several prominent entities have reaffirmed their faith in the Adani Group. GQG Partners, a Florida-based investment firm, remains committed to its $9.7 billion stake in Adani companies, citing strong fundamentals and unwavering confidence in its investment strategy. Israel, too, has expressed continued support, with Ambassador Reuven Azar encouraging further investments and stating no concerns from their perspective.
Abu Dhabi's International Holding Company (IHC) has echoed this sentiment, reiterating its trust in Adani, particularly in the green energy and sustainability sectors. Japan's major banks, including Mizuho Financial Group, Sumitomo Mitsui Financial Group, and Mitsubishi UFJ Financial Group, have also stood firm, viewing India as a crucial growth market and expressing confidence in Adani's cash-generating assets and repayment capacity.
However, not everyone is convinced. Some Indian lenders, including SBI and ICICI Bank, are reportedly adopting a cautious approach, continuing funding for near-completion projects but reassessing future commitments. International players like Barclays and Jefferies have also paused new dealings, with Barclays having already reduced its exposure after the initial allegations and Jefferies awaiting the outcome of ongoing investigations.
The controversy has also triggered reevaluations of dealings with the Adani Group in countries like Kenya, Bangladesh, and Sri Lanka. Kenya has canceled two major agreements, while Bangladesh is conducting a comprehensive review of power agreements. Sri Lanka has taken a more measured approach, launching an investigation into Adani's local projects while continuing its partnership on key infrastructure.
Despite the ongoing controversy, Adani Group shares have witnessed a surge for the third consecutive day. Adani Green Energy led the gains, followed by Adani Total Energy Solutions and Adani Total Gas. This rally comes after Adani Green's clarification refuting the bribery allegations.
The Adani Group's future remains uncertain, caught in a tug-of-war between unwavering support and cautious skepticism. The coming days and weeks will be crucial in determining the trajectory of this business empire amidst the storm.