S&P Global Ratings has revised its outlook on three Adani Group entities from "stable" to "negative," citing concerns over the conglomerate's access to funding in light of legal troubles faced by its billionaire founder, Gautam Adani.

This adjustment follows U.S. federal charges against Adani and seven others, including his nephew Sagar Adani, for alleged bribery in a $265 million scheme to secure power supply contracts in India.

Adani Group has strongly denied the accusations, describing them as "baseless" and vowing to pursue all available legal remedies. In addition to the federal charges, the U.S. Securities and Exchange Commission has filed a parallel civil case against the group. Despite the company's rebuttal, S&P noted that the allegations could significantly erode investor confidence, particularly since Gautam Adani holds key positions across various Adani entities.

"The group's ambitious growth plans necessitate consistent access to both equity and debt markets," S&P stated in a note. "Given the founder's prominent role, these allegations could lead to higher borrowing costs and limited funding access for the group as a whole. Both domestic and international banks, as well as bond market investors, often view Adani Group entities collectively, and this development may result in tightened exposure limits."

Among the entities impacted by S&P's revised outlook are Adani Green Energy, Adani Electricity, and Adani Ports. While the allegations directly implicate Adani Green Energy, the interconnected nature of the group has led to similar downgrades for the other units. S&P warned that ratings for these entities could face further downgrades if the charges are substantiated, potentially hampering their cash flow and refinancing capabilities.

Following the news, Adani Group stocks and bonds experienced notable declines for a second consecutive day, underscoring market jitters over the legal issues.

Australian Subsidiary Faces Hurdles

Amid the legal troubles surrounding its founder, Adani Group's Australian coal subsidiary, Bravus Mining and Resources, is facing allegations of racial discrimination. The Nagana Yarrbayn Wangan & Jagalingou Cultural Custodians, an Aboriginal group in Queensland, lodged a complaint with the Australian Human Rights Commission, accusing Bravus of obstructing their access to culturally significant springs near the Carmichael coal mine.

According to the group's statement, Adani employees allegedly attempted to "verbally and physically obstruct" members from performing cultural rites and sharing traditional knowledge at the site. Adrian Burragubba, a senior cultural custodian, stated, "We have endured years of discrimination and vilification from Adani. Legal recourse is the only way forward."

Bravus has denied the allegations, dismissing them as an attempt to undermine the company's reputation.