France’s Total halts new investment in Adani; GQG backs Adani
French energy giant TotalEnergies SE on Monday said it was not aware of the corruption investigation its partner Adani group’s founder chairman was facing in the US and that it is pausing fresh investments in the conglomerate pending the outcome of the charges.
Separately, GQG Partners, which made huge bets on Adani group post hammering it saw in the aftermath of the Hindenburg Report last year, said the indictment is against individuals only and the bet it made on the group holds good.
TotalEnergies is one of the biggest foreign investors in billionaire Gautam Adani’s business empire and had previously taken stakes in the group’s renewable energy venture Adani Green Energy Ltd (AEGL) and city gas unit Adani Total Gas Ltd (ATGL).
In a statement, the French firm said it learnt of US authorities indicting Gautam Adani and two other executives for allegedly paying USD 265 million bribes to Indian officials to secure solar power supply contracts for AEGL.
“This indictment does not target AGEL itself, nor any AGEL-related companies,” TotalEnergies said. “Until such time when the accusations against the Adani group individuals and their consequences have been clarified, TotalEnergies will not make any new financial contribution as part of its investments in the Adani group of companies.”
Adani group has dismissed the allegations brought in the US court as baseless and has said it would seek all possible legal recourse.
TotalEnergies holds a 19.75 per cent stake in Adani Green Energy Ltd - the renewable energy arm of the Indian group helmed by Gautam Adani. It also has a 50 per cent stake in three joint venture companies that produce electricity from sunlight and wind with AEGL.
The French firm also holds a 37.4 per cent stake in ATGL, which retails CNG to automobiles and pipes natural gas to households for cooking.
“In accordance with its code of conduct, TotalEnergies rejects corruption in any form,” the French giant said in the statement. “TotalEnergies, which is not targeted nor involved in the facts described by such indictment, will take all relevant actions to protect its interests as a minority (19.75 per cent) shareholder of AGEL and as a joint-venture partner (50 per cent) in project companies with AGEL.”
The company said it made the investments in Adani’s entities “in full compliance with applicable laws”.
GQG, whose exposure to Adani group companies stands at USD 8.1 billion, said, “On a fundamental business case, we continue to believe each individual company is well-positioned for the future”.
“Our investments in Adani as of November 21 have had positive returns in aggregate for our portfolios,” GQG said in a note.
The bribery allegations, it said, relate only to AGEL, not other Adani companies.
“While the allegations are serious, there are many examples of global companies and their executives who have faced significant government action,” it said. “These actions and investigations typically take years to resolve and may yield reduced penalties or fines.”
Except for AGEL, GQG did not see any other Adani group company needing additional financing at this point.
“There are no signs of domestic banks, especially India’s government-owned banks, of shutting off credit to the Adani group,” it said, adding it believes the companies will keep operating even if individuals receive fines or sanctions.
GQG said it will remain diligent in re-underwriting its positions and examining any new facts.
TotalEnergies said its investments in Adani group companies were in conformity with its own internal governance processes pursuant to due diligence and representations made by the sellers.
“In particular, TotalEnergies was not made aware of the existence of an investigation into the alleged corruption scheme,” the statement added.
In January 2021, TotalEnergies acquired a minority interest in the listed company Adani Green Energy Limited (AEGL) of which it now owns 19.75 per cent. As part of its strategy to enhance its development in renewables in India through direct access to a portfolio of assets, it has also acquired a 50 per cent stake in three joint ventures operating renewable assets (AGEL23 in 2020, AREL9 in 2023, and AREL64 in 2024).
The French energy giant had in February last year put on hold a planned investment in Adani Group’s USD 50 billion hydrogen project pending results of an audit launched following allegations by a US short-seller.
While the partnership, where the French oil giant was to take a 25 per cent stake in the hydrogen venture of the Adani group, was announced in June 2022, TotalEnergies had not yet signed a contract.
As per the June 2022 announcement, TotalEnergies was to take 25 per cent equity in Adani New Industries Ltd (ANIL) – the Adani Group firm that is investing USD 50 billion over 10 years in a green hydrogen ecosystem, including an initial production capacity of 1 million tonnes before 2030.
The announcement by Total adds to the woes of Adani. The crisis around the group, which began when Hindenburg released a damning report in January 2023, has also been used by the opposition parties to attack the government, alleging that the tycoon’s rise was primarily because of his association with Prime Minister Narendra Modi. The government has rejected the allegation.
Hindenburg’s allegations of accounting and financial fraud unleashed an over USD 150 billion rout in market value across Adani’s companies. Adani group has vehemently denied the allegations, calling them malicious and an “attack on India”.
The group stocks had recovered most of the losses before last week’s indictment in a New York Court.
TotalEnergies, France’s largest oil and gas company, first joined hands with Adani in 2018 for a liquefied natural gas (LNG) venture before buying a 19.75 per cent stake in AGEL and a stake in solar assets for USD 2.5 billion in 2020-21. It also took a 37.4 per cent stake in ATGL.
