Adani raises $1.4 bn from stake sale in 3 cos; $9 bn raised in 4 yrs

Billionaire Gautam Adani has raised $1.38 billion (Rs 11,330 crore) through stake sale in three group companies, taking the total capital raised over four years to $9 billion as the conglomerate draws interest from a cross-section of investors.

In a statement, the ports-to-energy conglomerate said it "is committed to raising capital to fulfill its 10-year roadmap of the transformative capital management program, which was formulated in 2016 to execute the plans for various portfolio companies."

"In the most recent instance, Adani family has raised $1.38 billion (Rs 11,330 crore) through stake sale in the three portfolio companies - Adani Enterprises Ltd, Adani Green Energy Ltd and Adani Transmission Ltd," it said.

"This ensures higher capital availability at the group level, for growth as well as near-term commitments of both debt and equity for the portfolio companies over the next 12-18 months."

In addition, the three portfolio companies have also received board approval for primary issuances through a share sale to investors as the group continues to build on a comeback strategy to emerge from allegations of fraud levelled by a US short-seller.

Adani Enterprises Ltd, the group's flagship firm, plans to raise Rs 12,500 crore through share sale to investors while electricity transmission company Adani Transmission another Rs 8,500 crore. Its renewable energy firm plans to raise Rs 12,300 crore.

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

The offer was fully subscribed but the company returned the money to subscribers.

US short-seller Hindenburg Research in January released a damning report alleging accounting fraud and stock price manipulation at Adani Group, triggering a stock market rout that had erased about $145 billion in the conglomerate's market value at its lowest point.

Adani Group has denied all allegations by Hindenburg and is plotting a comeback strategy that includes recasting its ambitions, scrapping acquisitions, pre-paying debt to address concerns about its cash flows and borrowings, and scaling back its pace of spending on new projects.

Promoters in two tranches have sold shares since May to leading US-based global equity investment boutique GQG Partners. The latest was earlier this month where $1.38 billion was raised.

"A similar stake-sale by the family in March 2023 aggregating to $1.87 billion (Rs 15,446 crore), resulted in full prepayment of margin-linked, share-backed financing and created flexibility in a rising rate environment to equitize debt capital as and when due," the statement said.

The group has been trying to win back market confidence with a series of investor roadshows, early debt repayments, and plans to scale back its pace of spending on new projects.

"Adani Group, which started the capital transformation journey for its core infrastructure portfolio in 2019, has raised over $9 billion in a short span of four years," it said.

"The programme paved the way for long-only global investors to participate in the world's largest and fastest-growing infrastructure development where Adani portfolio offers a one-stop play through its portfolio companies spread across the infrastructure spectrum from energy and utility to transport and logistics."

It has attracted investments across various 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 participation of strategic long term investors, Adani has attracted large-scale investments from the likes of Qatar Investment Authority (QIA), TotalEnergies (TTE) , International Holding Company (IHC), as well as GQG Partners (GQG) along with its co-investors Australia Super, Goldman Sachs, University of Texas, Delaware Public Employees Retirement System, Master Trust Bank of Japan, Missouri Education Pension Trust, Abu Dhabi Investment Authority, Universal Investment Luxembourg, New York State Common Retirement Fund and Employees Retirement System of Texas," it said.

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

"The faith and confidence shown by these large global investors are proof of the underlying strength of the group's businesses 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 each stage and achieve the stated goals," the statement said.

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

AGEL is the largest and the fastest-growing renewable power company in India with an operational portfolio of 8.1 GW. It envisions commissioning 45 GW of renewable energy capacity by 2030, while being the lowest cost generator of renewable power.

ATL is the largest private energy solutions player in India with presence in power transmission and distribution and an increasing focus on smart metering. Smart meters will enable electricity distribution companies to efficiently integrate and plan renewable energy into power grids and are essential tools for the decarbonization of the energy sector.