Japanese Lenders Stay Steadfast
Japan’s major financial institutions, including Mizuho Financial Group, Sumitomo Mitsui Financial Group, and Mitsubishi UFJ Financial Group (MUFG), are standing firm in their support for Gautam Adani’s conglomerate despite US bribery charges against the Indian billionaire and his associates. While global banks such as Barclays and Jefferies Financial Group reassess their exposure, the Japanese lenders remain confident in their ties to the Adani Group, citing the conglomerate’s cash-generating assets and strong ties with the Indian government.
Insiders revealed that the banks do not anticipate a significant long-term impact from the allegations and are open to providing fresh financing if required. However, spokespeople for the three Tokyo-based banks declined to comment, as did an Adani Group representative. The controversy stems from allegations of a $250 million bribery scheme aimed at securing solar energy contracts in India, which Adani has dismissed as baseless. The company is engaging with lenders and investors to reaffirm its position and address concerns.
Global Banks and Investor Caution
In contrast to the steadfast approach of Japanese banks, other international financial institutions have adopted a cautious stance. Barclays, a long-time partner of Adani, has paused new financing arrangements and reduced its direct lending and bond underwriting exposure. Jefferies, which defended Adani during previous allegations, has taken a wait-and-see approach, avoiding new deals until the legal process unfolds. At least two other major US banks have also suspended plans to fund Adani’s projects.
The fallout from the allegations is affecting Adani’s market performance. The conglomerate’s dollar bonds and shares plunged following the US indictment, prompting credit rating agencies, including S&P Global Ratings and Fitch, to downgrade their outlook on Adani companies. Additionally, global firms like TotalEnergies SE and governments like Kenya’s are halting investments and contracts with Adani until the legal implications become clearer.
Adani’s Resilience and Broader Support
Despite the challenges, Japanese banks are not alone in their support for Gautam Adani. Middle Eastern financial institutions, including Emirates NBD Bank PJSC, have also expressed confidence in the conglomerate’s ability to manage its obligations. These banks remain committed to their existing projects and are open to future collaborations, citing robust due diligence and the solid performance of Adani’s asset-heavy businesses, such as ports and airports.
Experts attribute the resilience of Japanese and Middle Eastern banks to their strategic interest in high-growth emerging markets like India. “Japanese and Middle Eastern banks see an opportunity to align with the growth potential of Indian conglomerates like Adani,” said Ashutosh Mishra, head of research at Ashika Stock Broking Ltd.
Although Adani Enterprises’ stock initially dropped 23% following the US charges, it has since partially recovered. The group maintains that Gautam Adani and his associates are not implicated under the US Foreign Corrupt Practices Act, offering a glimmer of hope for investors and partners. However, as global scrutiny intensifies, the coming months will be pivotal in shaping Adani’s financial relationships and market standing.
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