Funding Fears Spark as Adani Faces Legal Challenges

S&P Global Ratings downgraded the outlook for three Adani Group companies from stable to negative after its founder was indicted on bribery charges in the U.S. This indictment risks eroding investor confidence, affecting access to funding and potentially increasing funding costs for the conglomerate.

S&P Global Ratings has shifted its outlook for three entities of the Adani Group from stable to negative, following a U.S. indictment of the conglomerate's founder, Gautam Adani, on bribery charges. This comes after claims that Adani and seven others, including his nephew Sagar, engaged in fraudulent activities related to power-supply deals worth $265 million.

Adani Group has strongly refuted the allegations made by U.S. federal prosecutors and the U.S. Securities and Exchange Commission in a parallel civil case, calling them 'baseless and denied'. The group stated it would pursue all possible legal avenues. However, S&P warns that investor confidence and access to funding could become compromised due to the legal issues surrounding Adani.

The group, which aims for continuous access to equity and debt markets due to its ambitious growth plans, might face limitations as banks and investors reassess their exposure limits to the group. The indictment has already triggered a decline in Adani's stocks and bonds for a consecutive session.

(With inputs from agencies.)