(Dec 30): The Adani Group will exit from Mumbai-listed Adani Wilmar Ltd in a US$2 billion (RM8.94 billion) multi-phased deal by selling its stake in its consumer joint venture (JV), as the conglomerate’s flagship focuses on its core infrastructure businesses.
The units of Adani Enterprises Ltd and Wilmar International Ltd agreed on Adani selling its shares to the Singaporean JV partner, according to a stock exchange filing. Both partners said that Adani Enterprises will sell 13% shares in Adani Wilmar to comply with the minimum public shareholding requirement.
Wilmar International has agreed to acquire the remaining 31% from Adani at a price not exceeding 305 rupees (RM15.96). That ceiling represents a discount to Monday’s closing price of 328.75 rupees, which gives Adani Wilmar a market value of about US$5 billion.
Post the two-phased transaction, Adani will completely exit its 44% holding in Adani Wilmar and use the proceeds for bolstering its core infrastructure business including air transport and renewable energy.
The stake sale comes amid legal challenges the group’s billionaire founder Gautam Adani is facing in the US, where federal prosecutors have alleged he played a part in a bribery scheme to win contracts in India. Ratings companies have cited that as a potential risk to fund raising for the group, as they placed multiple Adani firms on negative watch.
The probe has not only renewed scrutiny on the conglomerate’s corporate governance, it has also made it trickier for the Adani Group to tap markets and could nudge them towards asset sales to fund infrastructure investments.
While Adani Green Energy Ltd scrapped a US$600 million green bond sale shortly after the US indictment in late November, its partner TotalEnergies SE suspended fresh investments.
Shares of Adani Enterprises gained as much as 8.3% in Mumbai trading and closed with their best single-day gains this month. Adani Wilmar’s shares fluctuated after the disclosure to eventually close with a 1.8% decline at 323.25 rupees.
Adani’s nominee directors will step down from the Adani Wilmar board and the company is likely to see a name change, the filing said.
Adani Wilmar, an equal JV between India’s Adani Group and the Singapore-based commodity trader, was slated to start a share sale this month to comply with local securities law that requires at least 25% of the holding to be with non-founders within three years of listing.
The company listed in 2022 and has until February next year to meet the public shareholding norms.
Bloomberg reported in August 2023 that Adani Enterprises was exploring selling its stake in its consumer-staple JV for freeing up capital for their core business.
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