Adani Group Raises $15 Billion Through Equity and Debt as Part of Comeback Strategy Post Hindenburg Controversy

• ByStartupStory     |    January 2, 2024

Billionaire Gautam Adani’s conglomerate has successfully raised over $5 billion (Rs 41,500 crore) in equity and double that amount in debt this year, marking a significant comeback since facing allegations from a short seller report earlier in the year. Adani, who was the world’s second-richest person at the beginning of the year, saw a substantial portion of his wealth, nearly $60 billion, wiped out following accusations of market manipulation and accounting fraud by Hindenburg Research in a report published on January 24. The group denied all allegations and revamped its strategy, leading to a remarkable recovery that has narrowed the gap to $36 billion from his starting wealth and placed him $12 billion behind rival billionaire Mukesh Ambani.

During this resurgence, prominent investor GQG Partners acquired stakes worth almost $4.3 billion in five Adani Group companies between March and August. Additionally, Qatar Investment Authority (QIA) and French energy giant TotalEnergies invested $770 million in Adani Green Energy Ltd, as per company filings and stock exchange data. Concurrently, the promoters infused $4.6 billion to repay loans against shares, service loans taken for cement acquisitions, and support green investments. The equity raise and loan acquisitions have restored investor confidence in the group, highlighting its bankability.

The Adani Group also secured $6.4 billion in loans across five companies and refinanced $3.5 billion of debt taken for the acquisition of ACC and Ambuja Cement in 2022. Furthermore, the group continued its mergers and acquisitions strategy, acquiring Sanghi Cement for $431 million, a 49.38% stake in Indian Oil Tanking for $128 million, Karaikal Port for $181 million, and Coastal Energen for $420 million, according to filings and stock exchange data. These efforts, coupled with the cancellation of an $850 million coal plant purchase, cost-cutting measures, and debt repayments, aimed to demonstrate the group’s responsible borrowing practices and financial stability.

Despite facing a significant market value decline of almost $150 billion at one point, the Adani Group’s strategic initiatives have led to a recovery in the share prices of its listed companies, offsetting the losses incurred after the Hindenburg Research report. However, the group’s cumulative market capitalization remains approximately 25% below its previous record of Rs 19.23 lakh crore before the report’s publication.

The Adani Group is planning a capital expenditure of Rs 7 lakh crore over the next decade to expand its infrastructure business, with six companies, including those in the power, ports, and airports sectors, planning to utilize bond markets for funding. Approximately 80% of the funding is expected to come from global debt issuances, with the remainder from domestic sources. This surge in the Adani Group’s stock prices has propelled Chairman Gautam Adani’s wealth to $84.3 billion, according to the Bloomberg Billionaires Index, placing him 15th in the global rich list. Mukesh Ambani of Reliance Industries Ltd is ranked 14th with a wealth of $96.3 billion.

Follow Startup Story