Mumbai: Total SA has agreed to acquire a 37.4% stake in city gas distributor Adani Gas Ltd for around ₹5,700 crore, in the French energy major’s biggest bet on India’s clean energy push.
The proposed acquisition also marks the largest foreign direct investment in India’s city gas distribution industry, with the deal giving Total joint control of Adani Gas, along with the Adani group.
Total, the world’s second-largest liquefied natural gas company, will buy the stake in Adani Gas through a combination of tender offer to public shareholders and from the Adani family, Total said in a press statement on Monday. The French company plans to acquire as much as 25.2% from the public and the rest from the Adani family.
Eventually, the Adani family and Total shareholders will hold 37.4% stake each and public shareholders will hold the remaining 25.2%. Publicly traded companies in India have to maintain a minimum public shareholding of 25%.
The Adani family owns a 74.8% stake in Adani Gas, which was listed on 5 November 2018. On Monday, shares of Adani Gas surged 9.26% to ₹150.40 on BSE.
The expanded partnership will develop re-gasification terminals, including Dhamra LNG on the east coast, sell liquefied natural gas (LNG) and through Adani Gas distribute gas to 7.5% of India’s population. The latest announcement comes a year after the two firms agreed to set up an equal joint venture to import and retail natural gas. As part of that, Adani and Total will build a fuel retail network of 1,500 stations along highways and intercity connections over 10 years.
Nicholas Browne, research director at consultant Wood Mackenzie said, “Adani is attractive to Total for several reasons. Firstly, the development of the Mundra and Dhamra regasification terminals provides Total with market access for LNG. Secondly, Adani Gas was an active bidder in the recent distribution auction rounds. In turn, this will provide Total with a firm demand for gas. Lastly, developing a standalone gas marketing and distribution business in India would take several years."