The indictment of Adani Group, its promoters and executives by the US authorities in an alleged Rs 2000-crore bribery case could negatively impact the fund-raising process of the Adani group.
Immediately after the charges of bribery became public, the renewable energy arm of the Adani Group — Adani Green Energy – on Thursday scrapped a $600-million bond issue.
Experts told The New Indian Express that raising of funds through debt instruments could get negatively impacted as it depends on the company’s credit rating, which could get impacted by the bribery charges. Rating agency Moody’s has already said the bribery charges could be credit negative.
According to Moody’s, the indictment of Adani Group’s chairman and other senior officials on bribery charges is credit negative for the group’s companies.
“Our main focus when assessing Adani Group is on the ability of the group’s companies to access capital to meet their liquidity requirements and on its governance practices,” the agency said in a statement.
If anything, the cost of funding would go up.
According to Shriram Subramanian, founder and managing director of InGovern Research Services, a proxy advisory firm, the borrowing costs for the Adani group are likely to increase by 200-300 basis points.
“Long-only equity investors will anyway stay away from investing in the stocks of the group due to the reputation issues,” he said.
Some industry experts though say that given the Adani Group’s earlier brush with controversies and its ability to come back strongly, the group will manage to find ways to raise funds, even if the cost of funds may go up.