NYSE to Delist Pension-Backed Azure as Corruption Probe Drags On

The New York Stock Exchange plans to delist Azure Power Global Ltd., an Indian renewable-power firm controlled by Canadian pension funds that’s embroiled in a corruption investigation.

(Bloomberg) — The New York Stock Exchange plans to delist Azure Power Global Ltd., an Indian renewable-power firm controlled by Canadian pension funds that’s embroiled in a corruption investigation. 

The exchange said Thursday it will start the delisting process after Azure warned it still can’t meet a deadline for filing its overdue 2022 financial statements. 

The Azure investment has been a governance nightmare for Caisse de Depot et Placement du Quebec, Canada’s second-largest pension manager, which acquired 56% of the company at a cost of about $480 million, according to Bloomberg calculations. 

Ontario Municipal Employees Retirement System is the no. 2 holder with about 23%, according to data compiled by Bloomberg.  

The New Delhi-based power producer is in the midst of an investigation into alleged “corrupt activities” in connection with one of its projects. The probe has been going on since last year, when it received a whistleblower complaint into misconduct by employees, and the new chief executive officer quit suddenly. The shares have lost more than 80% of their value since that disclosure; trading is now suspended. 

In the meantime, Azure has appointed a new accounting firm, ASA & Associates LLP, to help finish financial statements for the fiscal year ended March 2022, but it might take about three more months. The company’s shares “are not suitable for listing, because the company is a late filer,” NYSE said in a statement. Azure had earlier said it may appeal any delisting decision. 

Azure has given few specifics about its internal investigation, though it also encompasses “certain asset acquisition transactions.” In May, the company appointed a new CEO and chief financial officer. 

“When there’s irregularities from a governance standpoint, the action plan is immediate and ruthless from the Caisse,” Charles Emond, the pension manager’s CEO, said in an interview in June. 

Although CDPQ has a significant loss on paper from the investment, “the reality is that there is still very good assets underneath. There is a plant, a company that distributes electricity to millions of Indians,” Emond said. “Share price is one thing, value is another one.” 

Spokespeople for CDPQ and Omers declined to comment.

What Bloomberg Intelligence Says

“Azure Power could face more risk of a technical default on its dollar bonds if it’s delisted from the NYSE. It’s nearing a July 15, 2023 deadline for filing audited financial statements for the fiscal year ended March 2022, and a maximum 12-month cure period ends on Aug. 16, 2023. The firm could look to obtain a waiver to avoid a default; that would require majority bondholder consent. This might not come easily, given the lack of clarity on its ability to resolve governance issues and the lack of audited financial information.”

— Bloomberg Intelligence credit analyst Sharon Chen

–With assistance from Paula Sambo.

(Updates with NYSE’s decision in the first paragraph)

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