Adani raises $1.4 bn from stake sale in 3 firms; $9 bn raised in 4 years

Billionaire Gautam Adani has raised US$1.38 billion (Rs. 11,330 crores) by selling stakes in three subsidiaries of the group, taking the total capital raised over four years to US$9 billion as the group attracts interest from a broad cross-section of investors.

In a statement, Ports to Energy said it was “committed to raising capital to achieve the 10-year roadmap of the Transformational Capital Management Program, which was formulated in 2016 to implement plans for various portfolio companies.”

“In the latest case, the Adani family raised US$1.38 billion (Rs. 11,330 crores) by selling stakes in the three portfolio companies – Adani Enterprises Ltd, Adani Green Energy Ltd and Adani Transmission Ltd,” the company said.

“This ensures higher capital availability at a group level, for growth as well as short-term liabilities for both debt and equity of the portfolio companies over the next 12-18 months.”

In addition, the three portfolio companies also received board approval for initial issuances through the sale of shares to investors as the group continues to build on its return strategy to emerge from fraud allegations leveled by a US short seller.

Adani Enterprises Ltd, the parent company of the group, plans to raise Rs 12,500 crore by selling shares to investors while power transmission company Adani Transmission another Rs 8,500 crore. Its renewable energy company plans to raise Rs 12,300 crore.

This comes five months after Adani Enterprises was forced to abort its Rs 20,000 crore follow-up public offering (FPO) in the wake of the Hindenburg Report.

The show was fully subscribed but the company refunded the subscribers.

US short seller Hindenburg Research in January released a damning report alleging accounting fraud and share price manipulation in the Adani Group, which led to a stock market crash that wiped out about $145 billion from the conglomerate’s market value at its lowest point.

The Adani Group has denied all of Hindenburg’s allegations and is planning a comeback strategy that includes reframing its ambitions, canceling acquisitions, prepaying debt to address concerns about cash flow and borrowings, and scaling back spending on new projects.

The promoters in two tranches have sold the shares since May to US-based global equity investment firm GQG Partners. The most recent one was earlier this month with $1.38 billion raised.

“The sale of a similar stake by the family in March 2023 totaling US$1.87 billion (Rs. 15,446 crore) has resulted in the full prepayment of equity-backed margin linked financing and created flexibility in a rising price environment to equalize debt capital as and when due,” the statement said. .

The group has been trying to restore market confidence with a series of investor roadshows, paying down debt early and planning to reduce the pace of spending on new projects.

“The Adani Group, which started the capital transformation journey of its core infrastructure portfolio in 2019, has raised more than $9 billion in a short period of four years,” the company said.

“The program has long paved the way for only global investors to participate in the world’s largest and fastest growing infrastructure development as Adani’s portfolio offers a one-stop shop with its portfolio companies spread across the infrastructure spectrum from energy and utilities to transportation and logistics.”

It has attracted investments across several listed entities – Adani Ports and Special Economic Zone Limited (APSEZ), Adani Green Energy Limited (AGEL), Adani Transmission Limited (ATL), Adani Total Gas Limited (ATGL) and Adani Enterprises Limited (AEL).

In line with the group’s capital management philosophy of enabling the participation of long-term strategic investors, Adani has attracted large-scale investments from the likes of Qatar Investment Authority (QIA), TotalEnergies (TTE) and International Holding Company (IHC), as well as as GQG Partners (GQG) Along with co-investors Australia Super, Goldman Sachs, University of Texas, Delaware Public Employees Retirement System, MasterTrust Bank of Japan, Missouri Education Pensions, Abu Dhabi Investment Authority, Universal Investments Luxembourg, New York State Mutual Fund and Texas Employees Retirement System “.

Qatar Investment Authority invested 452 million US dollars in ATL in February 2020 while TTE invested 3.3 billion US dollars in a joint venture with APSEZ, ATGL and AGEL in April 2019. IHC invested 2 billion US dollars in AEL, ATL and AGEL in May last year and invested GQG $3.19 billion in AEL, ATL, AGEL and APSEZ this year.

“The faith and confidence shown by these large global investors is evidence of the core strength of the group’s business and the Adani Group’s commitment to the highest level of governance. Moreover, the success of the investment program also demonstrates the group’s ability to raise funds across companies at every stage and achieve the stated goals.”

AEL is among the world’s largest business incubators, focusing on building infrastructure businesses. Its strategic priorities include the airport and the green hydrogen business. Green Hydrogen will enable the decarbonization of the industrial and mobility sectors, and support India’s drive towards self-sufficiency in primary energy.

AGEL is India’s largest and fastest growing renewable energy company with an operating portfolio of 8.1 GW. It is expected that 45 GW of renewable energy capacity will be in operation by 2030, while it is the lowest cost renewable energy generation.

ATL is India’s largest private energy solutions company with a presence in power transmission and distribution and a growing focus on smart meters. Smart meters will enable electricity distribution companies to efficiently integrate and plan renewable energy into power grids and are essential tools for decarbonising the energy sector.