India’s Adani Group, under the leadership of billionaire Gautam Adani, is set to embark on a massive investment spree, allocating $84 billion for infrastructure projects over the next decade. Chief Financial Officer Jugeshinder Singh shared this strategic move, emphasizing an increase in capital expenditure to drive the development of diverse infrastructure initiatives.
Infrastructure Portfolio:
The port-to-power conglomerate, already managing India’s largest private port, has a multifaceted approach, including the development and management of airports and roads. Specific details about the types of projects were not disclosed, leaving room for speculation about the scope and nature of these ventures.
Stake Divestment Consideration:
In a significant move, Adani Group is contemplating divesting its 44% stake in Adani Wilmar, a joint venture with Wilmar International from Singapore. This decision is expected within the next three months, and there are indications that Gautam Adani and his family might retain a minority stake in a personal capacity.
Adani Group faced challenges earlier when a report by Hindenburg Research raised concerns about debt levels and the use of tax havens, resulting in a substantial market capitalization loss. However, the conglomerate has strongly denied all allegations. Jugeshinder Singh clarified that the cost of funds has not significantly risen post these allegations, with the weighted average cost of capital for core infra business remaining steady between 9.25-9.50%.
Fundraising Strategies:
Around 80% of the company’s long-duration capital is sourced from the global capital market, with the remaining 20% from the domestic market. Adani Group entities, including Adani Ports and SEZ, Adani Green Energy, Adani Power, and airports and roads within Adani Enterprises, are exploring domestic bond market options. The conglomerate may also consider a public bond issue starting from February.
Future Bond Market Initiatives:
Adani Green Energy and Adani Transmission are eyeing the overseas bond market and plan to issue Regulation-S and Regulation-D bonds in 2024. Adani Green Energy specifically aims to raise $350 million in notes to refinance existing debt maturing in December 2024.
Adani Group’s strategic investment plan and fundraising initiatives underscore its commitment to playing a pivotal role in India’s infrastructure development. Despite past challenges, the conglomerate remains forward-looking and resilient in its pursuit of growth.
