Adani puts Hindenburg behind with a $3-billion fundraising plan

Centerbridge Partners LP, Pacific Capital Group and the UAE’s International Holding Co. (IHC) are among the PE firms that have expressed interest in investing in Adani New Industries Ltd, Adani Airport Holdings Ltd and Adani Green Energy Ltd, said one of the two people cited above, both of whom spoke on condition of anonymity.

“Over the past six weeks, Adani group officials have held talks with multiple PE firms in the US, Canada, West Asia and Europe to raise capital via the sale of equity shares in subsidiaries. Investors are upbeat after the Supreme Court’s recent judgement in the Hindenburg (Research report) case," the person added.

Emails sent to the Adani group, Centerbridge, Pacific Capital and IHC remained unanswered.

State Bank of India, Bank of Baroda and Axis Bank are some of the prominent lenders in discussions with the group, the people said. Emails sent to the banks seeking comment remained unanswered.

The Adani group, according to the two people, is looking to raise at least 40% of the capital through a combination of sale of equity stakes in group firms and promoter fund infusion, while the remaining 60% could be through debt.

The funds are primarily to fund its mega green hydrogen project, its solar panel manufacturing business and the upcoming Navi Mumbai International Airport Ltd (NMIA) project. “All three projects have been fast-tracked. Capex plans are on track," said the first person.

According to the two people, the Adani group plans to invest most of the new funds in its renewable energy businesses, mainly green hydrogen (of Adani New Industries) and solar panel manufacturing (of Adani Solar, an arm of Adani Green Energy). “From the upcoming funds being raised, over $2 billion will be used for building up the green hydrogen capacity and solar panel manufacturing capabilities," said the first person.

“Green hydrogen is an area in which most of the global funds are increasingly willing to invest with focus on ESG (environmental, social and governance) compliance. Banks are comfortable with such projects due to their long-term sustainability and the government’s emphasis on decarbonisation," said the second person.

The renewed interest in the Adani group’s projects follows the Supreme Court’s 3 January verdict on the Hindenburg Research matter, stating there is no ground to transfer the case to the Central Bureau of Investigation or a special investigation team (SIT), and that the contents of the Hindenburg report need not be taken as a “true state of affairs".

The conglomerate’s market capitalization, which was eroded by $150 billion at one point last year following the Hindenburg report, crossed the ₹15 trillion mark soon after the Supreme Court judgement.

The Adani group has already invested close to $1 billion in the Navi Mumbai airport to operationalize the first of the four planned passenger terminals by December 2024.

“The airport work will progress faster now with the direct connectivity established with Mumbai city and JNPT (Jawaharlal Nehru Port Trust) after the recent completion of the Mumbai Trans Harbour Link (MTHL)," the first person added.

MTHL was opened on 13 January to connect Mumbai with Navi Mumbai through the country’s longest bridge built over a large creek of the Arabian Sea after five decades of rigorous planning.

The Navi Mumbai town planning authority—City Industrial Development Corporation—is building a 7km coastal highway from Amra Marg junction in Belapur to JNPT in order to provide smooth connectivity to NMIA and spur the state’s economic growth.

For the Adani group, MTHL may provide further impetus to the business of NMIA, which requires a total investment of at least $2.5 billion, of which at least ₹12,770 crore ($1.74 billion) is expected to be raised as term loans from a consortium of lenders.

The Navi Mumbai airport project, which will have a capacity to handle 90 million passengers and 2.5 million tonnes of cargo annually, is planned to be completed by 2032.

On 13 January, civil aviation minister Jyotiraditya Scindia said 55% of the NMIA project has been completed, while the government aims to double domestic passenger traffic in the country from the present 150 million to 300 million by 2030.

Meanwhile, the Adani group is targeting a green hydrogen capacity of 3 million tonnes in the next 10 years with an investment of $50 billion. It has already spent about $2.5 billion in developing a backward integrated value chain for its green hydrogen project in Mundra, Gujarat, and hopes to implement the first phase with 1 millions tonnes per annum capacity by fiscal 2027.

In June 2023, France’s TotalEnergies SE and the Adani group said they plan to invest $5 billion to produce green hydrogen and related products in India, as the world’s third-largest polluting nation seeks to decarbonize.

And, on 13 January, Solar Energy Corp. of India Ltd asked the Adani group to set up electrolyzer manufacturing capacity under the production-linked incentive (PLI) scheme for green hydrogen, which has encouraged the conglomerate to speed up its green hydrogen project and raise the required funds.

Adani Green Energy aspires to become the world’s largest renewable energy company by 2030.

Till last year, Gautam Adani has maintained that 75% of the group’s planned capital expenditure will be in green businesses, and that the group will invest $20 billion over the next eight years in renewables their related components and infrastructure.

As part of its renewables push, Adani Solar has set up India’s largest vertically integrated solar photovoltaic cell and modules manufacturer with 4GW manufacturing capacity, which offers services across the spectrum of photovoltaics manufacturing, the Adani group said in a presentation.

The group, under Adani New Industries, is planning to build 10GW solar panel manufacturing in India. The group last July said it has secured an order book of over 3,000MW in exports. The booked orders are projected to be serviced by September this year.

The Adani group has been setting up vast rows of solar panels and digging foundations for large wind turbines in the sandy Rann of Kutch stretch of Gujarat over the past few months. Once completed, the Khavda renewable energy park will cover 726 sq. km with a capacity to generate 30GW of solar and wind energy.