Adani hikes stake in two group companies
The billionaire Gautam Adani-led promoter group has taken steps to increase its stake in two of the Adani Group’s listed companies, as part of a strategy to regain control and confidence following damaging reports.
According to stock exchange filings, the promoter group has raised its stake in the flagship Adani Enterprises to 71.93 percent from the previous 69.87 percent. Notably, this marks the second time in less than a month that the promoters have increased their stake in Adani Enterprises, the company responsible for incubating new businesses. In the previous month, they had raised their stake from 67.65 percent to 69.87 percent.
Additionally, the promoter group has also increased its stake in Adani Ports and Special Economic Zone Ltd from 63.06 percent to 65.23 percent, as indicated by the filings.
These moves to increase ownership stakes in these key Adani Group companies suggest a concerted effort to strengthen their positions within the conglomerate. It’s likely a response to challenges faced by the group, including negative reports and market dynamics, as they work to stabilize and enhance their control over their businesses.
The increase in stake by the Adani Group’s promoter firms is accompanied by additional purchases by Resurgent Trade and Investment Ltd and Emerging Market Investment DMCC, both belonging to the promoter group. Resurgent Trade and Investment Ltd acquired nearly one percent of the stake in Adani Ports and Special Economic Zone Ltd through open market transactions, while Emerging Market Investment DMCC added 1.2 percent to its stake in the same company.
Regarding Adani Enterprises Ltd, the shares were acquired through open market transactions by Kempas Trade and Investment Ltd and Infinite Trade and Investment Ltd.
These recent developments follow closely after US-based boutique investment firm GQG Partners made significant purchases of shares in Adani group companies. GQG increased its stake in Adani Ports & Special Economic Zone (APSEZ) to 5.03 percent through a bulk deal, as indicated in stock exchange filings last month.
These moves suggest ongoing investor interest and activity in Adani Group firms, reflecting the evolving dynamics of ownership and investment in the conglomerate’s businesses.
GQG Partners has now accumulated a stake in five out of the ten Adani Group companies. On August 16, the firm acquired a 7.73 percent stake in Adani Power Ltd. In this instance, promoter group firms Worldwide Emerging Market Holding and Afro ASIA Trade And Investments had divested an 8.09 percent stake in Adani Power through block deals on the same day. Of this, GQG Partners purchased 7.73 percent, as indicated by stock exchange filings.
Following this stake sale, the promoter holding in Adani Power decreased from 74.97 percent to 66.88 percent.
It’s important to note that GQG Partners’ involvement and purchases in Adani Group companies have followed a period of scrutiny and challenges. A report released by the US short-seller Hindenburg Research in January had made allegations of accounting fraud, stock price manipulation, and improper use of tax havens within the Adani Group. This report had a significant impact on the market value of Adani Group firms, leading to a sharp decline in their valuation at one point, amounting to approximately USD 150 billion. GQG Partners’ investments in these firms appear to signal their assessment of the evolving situation and investment opportunities within the group.
The Adani Group has categorically denied all the allegations made by Hindenburg Research. In response to the challenges it faced, the group has been actively implementing a comeback strategy. This strategy includes reevaluating its aspirations, reconsidering acquisitions, reducing debt through prepayments to address concerns about cash flows and borrowings, and moderating the pace of spending on new projects.
On the other hand, GQG Partners appears to have dismissed the allegations made by Hindenburg Research. Starting in May, GQG began to invest in various Adani Group companies. This includes a 5.4 percent stake in Adani Enterprises, a 6.54 percent stake in Adani Green Energy Ltd, and a 2.5 percent stake in Adani Transmission Ltd.
Following these investments and amid the implementation of the comeback strategy, Adani Group stocks have shown signs of recovery, regaining some of the losses they incurred during the period of market turbulence and scrutiny.
These developments highlight the resilience and adaptability of the Adani Group and its ability to regain investor confidence as it works through the challenges and uncertainties it has faced.
GQG Partners has invested a substantial amount of Rs 38,700 crore in various Adani Group firms. Additionally, Qatar Investment Authority (QIA) has invested Rs 4,100 crore in Adani Green Energy, and Bain Capital has contributed Rs 1,440 crore. These investments by reputable entities have played a role in rebuilding investor confidence in the Adani Group.
In addition to the promoter group’s stake sales, these three portfolio companies have received board approvals for primary issuances through share sales to investors:
1. Adani Enterprises plans to raise Rs 12,500 crore through a share sale to investors.
2. Adani Transmission aims to mobilize Rs 8,500 crore through a share sale.
3. Adani Green Energy intends to raise Rs 12,300 crore.
It’s noteworthy that Adani Enterprises is involved in incubating green hydrogen projects, while Adani Green Energy serves as the renewable energy arm of the group, with ambitious plans to build 45 GW of renewable energy capacity by 2030.
These fundraising initiatives signal the group’s commitment to expanding its businesses and investments in sectors such as renewable energy and green hydrogen, aligning with its long-term growth and sustainability objectives. The participation of prominent investors in these efforts reflects growing confidence in the group’s prospects and strategies.
