Adani revives capex plans for $1.5 billion
In November 2021, the Adani group stated it would invest $70 billion in new energy over the next decade
PremiumMumbai: Adani Enterprises Ltd, the group holding company with business interests ranging from seaports to airports, has revived its capex plan after a four-month pause, with a planned initial investment of $1.5 billion to kickstart its new businesses, two people familiar with the matter said.
The flagship company, which cancelled its fundraising plan in February, is planning to pump fresh investments into solar module manufacturing, green hydrogen, Navi Mumbai Airport and data centres (Adani ConneX).
“A major portion of the proceeds from the qualified institutional placement (QIP) will be used for new businesses, where capex plans were put on hold due to the cancellation of the FPO (follow-on public offering)," one of the two people said, requesting anonymity.
On Saturday, the boards of Adani Enterprises and Adani Transmission cleared plans to raise up to ₹12,500 crore and ₹8,500 crore, respectively, via QIPs.
Adani Enterprises’ FPO, aimed at raising ₹20,000 crore was hit by a scathing report by short-seller Hindenburg Research, which alleged the group had manipulated stocks and committed accounting fraud. The FPO was cancelled in February after significant volatility in Adani stocks.
The people cited above said that ₹8,000 crore- ₹10,000 crore from the cancelled FPO was meant to be used for investments in airports and the group’s new businesses, including solar module manufacturing, data centres, digital asset building and electronic chip manufacturing businesses as the group is gearing up for launching a super-app. Further, Adani’s green hydrogen business (under Adani New Industries Ltd) was to get at least ₹2,000 crore from the FPO proceeds, according to the people.
“The fresh capital will now come from the planned QIPs by group firms, which may help the group stay on track in its capex plans," said the first person. “Adani Transmission will use ₹8,500 crore of its proposed fundraising to expand transmission lines and double its power distribution network," he said.
An email sent to a spokesperson for the Adani group didn't elicit any response.
Several key businesses under Adani Enterprises are interlinked through the Adani New Industries unit, which is engaged in green hydrogen projects, low-carbon electricity generation, wind turbines and solar module manufacturing, electrolyzers, and batteries.
In November 2021, the Adani group stated it would invest $70 billion in the new energy space over the next decade. Through Adani New Industries, the group plans to invest $50 billion by 2030 in creating a green hydrogen ecosystem.
Additionally, the company is setting up a 20GW co-located wind and solar project at Mundra, Gujarat.
Rival Reliance Industries Ltd has pledged $10 billion in new energy over the next three years.
Adani group’s solar–ingot, wafer, cell, modules and wind turbine projects are also under construction. Apart from commissioning a 20GW renewable energy project, Adani New Industries plans to set up a 16GW electrolyzer capacity, a 1 mmtpa green hydrogen compression plant, a 200 km pipeline, a 5.6 mmtpa green ammonia capacity, and an air separation unit for nitrogen generation.
If the QIPs succeed, it will bolster Adani group’s position in the new energy sector, enabling it to take on Reliance Industries.
According to the people cited above, all capex plans for new and existing businesses of Adani New Industries, solar and digital businesses will be fast-tracked with the fresh infusion of funds.
Adani Enterprises owns 50% of AdaniConneX, 44% of Adani Wilmar Ltd, and wholly owns Adani Airport Holdings Ltd, Adani Roads Transport Ltd and Adani Digital Ltd.
“Adani Airport Holdings will get a portion of the fresh funds to speed up the completion of the Navi Mumbai Airport," said the first person.
The Adani group has planned to invest ₹8,000 crore across its airports business over the next five years, and a major portion of this investment will come from the QIP proceeds.
The company may use a small portion of the QIPs to partly pay its ₹2,448 crore loans for Adani Airports Holdings.
The group also plans to use ₹4,500 crore- ₹5,000 crore out of the proposed QIP proceeds to repay its creditors to get share pledges released in group firms to calm investors.
Between January and March, the group has repaid at least $3 billion to get a large part of promoter share pledges released.
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