Prosecutors from the US Attorney Office and Justice Department (DoJ) are reportedly looking at an Adani Group entity and Azure Power Global around potential bribery investigations. An Adani Group entity potentially involved in “paying officials in India for favorable treatment on an energy project˙.
Based on the profile of USD bond issuers from the group, this could be related to Adani Green Energy. Notably, there is one 12GW manufacturing-linked solar energy project that was signed by both Adani Green (8GW allocation) and Azure Power (4GW) with SECI (Solar Energy Corporation of India) in January 2020.
This project remains under construction and does not form part of any of the Restricted Group bonds from these two entities.
The US anti-bribery provisions can lead to a fine of US$2m or twice the monetary gain, whereas for individuals it could be up to 5 years˖ imprisonment and a US $250,000 fine or twice the monetary gain. Overall, assuming this is related to the renewable energy project of the companies, such provisions are highly unlikely to lead to a material financial impact even if the reported investigation moves to the prosecution stage and thereupon establishment of an instance of bribery.
Given the high level of transparency involved in various renewable energy tenders floated in India, the scope for significant corruption and bribery looks highly unlikely, reports say.
Azure Power had also announced that its Chairman MS Unnikrishnan has resigned from the board of the company. While he was appointed Chairman only in October 2023, he was a board member of the company since August 2020. The recent bond buyback (as stipulated in bond covenants) highlights continued good operating cash flows at the two RG bonds. Last week Azure had announced completion of tendering of about $40m of AZUPOE 2024s and $12m of AZUPOE 2026s.
As late as November 2023, Adani Ports had received about US$553m as a loan for its Colombo Port project from the US government’s development financial arm, DFC. While this may not imply a “clean chit˙, it does indicate some level of diligence being undertaken at the Adani Ports level ahead of making the investment, says JP Morgan Bank.
