Adani Group shares nose gravel after chairman Gautam Adani accused of fraud in New York

India’s Adani Group saw shares of its companies plunge on Thursday after its billionaire chairman Gautam Adani was indicted in a New York federal court for his alleged involvement in a wide-ranging bribery and fraud operation.

The 62-year-old billionaire and the seven other defendants have been accused of paying more than $250 million in bribes to Indian government officials to secure solar power contracts that could generate more than $2 billion in profits.

The Indian group’s flagship company Adani Enterprises fell 10%, while the company in the eye of the storm, Adani Green Energy, fell 17.28%. Adani Energy fell 20 per cent.

Adani Power lost 13.81%, Adani Port’s share price fell 10%, while the group’s retail arm Adani Wilmar fell 7.87%.

Benchmark NSE Nifty 50 The index fell 0.63% in its first hour of trading.

Adani, along with two executives from Adani Green Energy Limited – his nephew Sagar Adani and Vneet Jaain – have been accused of misleading US and international investors about the company’s compliance with anti-bribery and anti-corruption standards while raising over $3 billion to finance energy projects.

Adani Green Energy has canceled its plan to raise funds through US dollar-denominated bonds, It was reported by Reuters.

“These are very serious allegations,” said David Riedel, president and founder of Riedel Research Group. “They will definitely be cut off from the US markets,” he said, adding that Adani may have to look for domestic sources of funding.

Riedel also expects more pain in the Adani-affiliated shares: “They are likely to give back everything that they have gained in the last year or so.”

The five-count indictment in US District Court in Brooklyn also charged Ranjit Gupta and Rupesh Agarwal, former executives of renewable energy company Azure Power Global, along with three former employees of Canadian institutional investor Caisse de Depot et Placement du Quebec – Saurabh Agarwal, Cyril Cabanes and Deepak Malhotra.

The CDPQ said it is aware of the allegations. “These employees were all terminated in 2023 and CDPQ is cooperating with US authorities,” the investor said in an email.

This comes after the conglomerate spent the better part of last year trying to move on from allegations of accounting fraud and “brazen stock manipulation” made by short-selling firm Hindenburg Research.

“Since we released our January 2023 report identifying Adani as the biggest corporate competitor in history, we have never wavered in our view, nor has Adani refuted our findings,” Hindenburg said in a statement to CNBC on Thursday.

The conglomerate had denied the claims, adding that it “has always complied with all laws.”

These charges do not change the “strong underlying fundamentals” of India’s market or the country’s growth trajectory, Raymond James head of advisory solutions and market strategy Matt Orton said.

“Once the dust settles, there will be even better opportunities for long-term investors in India,” he said.

—CNBC’s Dan Mangan contributed to this report.