Fitch assigns negative outlook to Adani Energy citing governance concerns

Fitch assesses that the US indictment for alleged securities and wire fraud reflects a corporate governance risk

Rating agency Fitch has assigned a negative outlook to Adani Energy Solutions (AESL), while affirming a 'BBB-' rating for the company, the agency said in a press statement.

 

“The ratings have been removed from Rating Watch Negative and assigned a Negative Outlook,” Fitch said.

 

The agency said that while they believe the risks associated with the group's liquidity and funding requirements have moderated, the negative outlook reflects their view that the proceedings and outcome of the US investigations could reveal that the group's corporate governance practices are weaker than expected and lead to negative rating action in the near to medium term.

   

“A conviction or any indication of weaknesses in Adani group entities' governance practices and internal controls that may come to light as part of the process could put pressure on the ratings,” Fitch said.

 

On affirming the rating, Fitch said the Adani group has demonstrated adequate funding access since the US indictment of certain board members of another group entity, Adani Green Energy Limited (AGEL), on November 20, 2024.

 

“Fitch will monitor the investigations for any evidence of weakness in the entities' governance practices and internal controls, and the impact on AESL's financial flexibility,” the note added.

 

On access to medium-term funding, Fitch added, “We believe the proceedings and the outcome of the US investigations could hamper the group's funding access. This could affect AESL's growth plans significantly, although it has some flexibility in its capex plans.”