Adani weighs $5 billion fundraise as banks urge deleveraging. Top executives at companies like Mubadala Investment Co. and Abu Dhabi Investment Authority have been also contacted by the network of businesses owned by Asia’s richest man about potential investments.
After lenders requested that the group reduce leverage, Indian billionaire Gautam Adani is courting sovereign wealth funds in an effort to raise about $5 billion across his vast business empire, according to people familiar with the situation.
The people, who asked to remain anonymous because the information is private, claimed that the network of businesses owned by Asia’s richest person had contacted senior executives at organizations like Mubadala Investment Co. and Abu Dhabi Investment Authority about investments.
According to them, Adani’s group is seeking investment from other sizable Middle Eastern and Canadian investment funds. According to one of the participants, the group has even talked about raising as much as $10 billion.
According to a report from Bloomberg News on Tuesday, flagship company Adani Enterprises Ltd. is thinking about issuing between $1.8 billion and $2.4 billion in new shares as early as next year. According to one of the people, the $5 billion to $10 billion target would include the money raised from a potential share issue by Adani Enterprises.
Adani Enterprises announced in a Tuesday exchange filing that the board of the company would discuss raising capital on Nov. 25.
The people stated that discussions are still ongoing and that no conclusions have been reached.
The Adani group’s systematic capital management program, which has been in place since 2019, includes plans for equity fundraising. Under this program, the Qatar Investment Authority and Abu Dhabi-based International Holding Co. have previously invested in the Indian company. According to one of the people, the fundraising will get underway with Adani Enterprises and is unrelated to the group’s plans to raise debt.
Adani Group, Mubadala, and ADIA representatives declined to comment.
This size of equity raise would address two of the most common criticisms of the ports-to-power conglomerate by increasing the liquidity of the companies’ stock as well as the group’s debt ratios. The Adani Group’s “elevated” leverage had been flagged in September by the research company CreditSights. The conglomerate had reacted angrily to the report, describing the leverage ratios of its companies as “healthy.”
The potential move by Adani is similar to one made by fellow Indian billionaire Mukesh Ambani, who sold shares of his conglomerate Reliance Industries Ltd. to raise more than $27 billion from foreign investors in 2020.
According to Mohit Nigam, a fund manager with Jaipur-based Hem Securities Ltd., the ports-to-power conglomerate is entering new markets “with a mindset to dominate” those sectors, making its stocks “a really good proposition” in the long run. The only issue, according to him, is debt, which is why both domestic and international institutional investors initially had second thoughts about buying Adani stocks.
But investors received excellent returns. If the share sale is successful, it will increase the stock’s liquidity and reduce its debt ratio.
The conglomerate reacted angrily to CreditSights’ flagging of the Adani Group’s “elevated” leverage in September by describing their leverage ratios as “healthy.” According to a report by Bloomberg News last month, Adani’s group plans to refinance its high-cost borrowings and fund upcoming projects by issuing at least Rs 81,794 crore ($10 billion) in new debt over the course of the next year.
According to those with knowledge of the situation, the effort could get underway as early as the current December quarter. The third-richest person on the planet has ventured into a wide range of industries, including green energy, airports, cement, digital services, and data centers. The second-largest deal in India this year was led by Adani, who spent Rs 85,877 crore ($10.5 billion) to acquire the local cement assets of Holcim Ltd. A takeover bid for New Delhi Television Ltd. has also been made by the company after it was revealed that it owned an indirect 29.2% stake in the broadcaster. The offer was made public on Tuesday and will remain open until December 5.
According to M&G Investments (Singapore) Pte, Adani’s group has drawn a lot of attention due to its debt-heavy balance sheet and not enough attention to its capacity to generate cash flow. According to Vikas Pershad, a Singapore-based fund manager at M&G, “the businesses Adani is incubating and operating in — ports, airports, rail, logistics — they are real businesses that generate cash,” adding that these units will expand as India develops. They are in the ideal situation at the ideal time.
ADANI DEBUT WEIGH, NHPC
Although they received significant oversubscription levels, the other two recent major IPOs by Adani Power and NHPC had disappointing market debuts. This may have a negative impact on other companies looking to list on the stock exchange and may cause some to rethink their pricing.
After being subscribed more than 20 times, Adani and NHPC were both priced at the top of their respective price ranges.
India’s oil is inexpensive. Ambareesh Baliga, vice-president of Karvy Stock Broking, predicted that although we would experience listing gains, they would not be significant enough.
“The issue will receive positive feedback, but not on the same scale as NHPC or Adani, where investors who used high leverage lost a lot of money. Therefore, they might not be as active this time, said Baliga.
Due to a 60 percent increase in the main BSE index, Indian companies have raised about $10 billion in share sales so far this year, exceeding full-year 2008 volumes.
Edited by Prakriti Arora