Adani Group Consider Raising Up To $5 Billion: Report

Boards of the three Adani firms are meeting on Saturday to consider raising funds via the sale of shares or other securities, according to exchange filings late on Wednesday

MSCI, a global index provider,  said that two Adani Group firms — Adani Transmission and Adani Total Gas Ltd. — will be excluded from its India gauge at the end of May.

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Three companies of Gautam Adani-led Adani Group are considering a fundraising that may draw as much as $5 billion, citing sources privy to the development Bloomberg reported on Friday. The sources told the news agency Adani Enterprises Ltd., the flagship, as well as Adani Green Energy Ltd. and Adani Transmission Ltd., may raise between $3 billion and $5 billion for a war chest to bolster the businesses.

According to the report, the boards of the three firms are meeting on Saturday to consider raising funds via the sale of shares or other securities, according to exchange filings late on Wednesday. They didn’t disclose how much they intend to raise or who they’re working with for potential deals. Adani Group stocks, which climbed Thursday, were largely lower in early Mumbai trading Friday as MSCI Inc. said it will remove two companies from its India gauge.

The companies’ boards usually approve fundraising plans to enable management to quickly tap markets when opportunities arise. Discussions are still underway and there’s no certainty the companies will announce a sum they’re looking to raise after the Saturday board meetings, the people said.

However, a representative for Adani Group declined to Bloomberg’s request for comment.

Any move by Adani Group companies to tap a broader group of investors for funds could backfire if the market isn’t convinced that the cloud hanging over the stocks has lifted — or find the prices still too high. Despite the coal-to-cement conglomerate denying fraud allegations made by Hindenburg Research in January, the broadside triggered a weeks-long stock rout that wiped out more than $100 billion of market value, forcing the billionaire to scrap a $2.4 billion share sale by his flagship firm priced at pre-attack levels.

MSCI, a global index provider,  said that two Adani Group firms — Adani Transmission and Adani Total Gas Ltd. — will be excluded from its India gauge at the end of May. Both stocks fell as much as 5 per cent on Friday. Adani Enterprises erased its early gains and was trading 0.6 per cent lower.

The Adani family in early March raised about $1.9 billion selling shares in four firms to US investment firm GQG Partners, held investor roadshows and prepaid debt as they raced to bolster confidence and repair the damage from short seller’s accusations.

The sources revealed Adani board meetings every year include proposing enabling resolutions to raise capital, which is part of their annual financial planning.

An analysis by Bloomberg of exchange filings shows Adani Enterprises and Adani Transmission have sought board approval for fundraising every year in April or May since at least 2019. Adani Green Energy secured such permission every year except in 2021, the data shows. The three firms raised almost $2 billion from Abu Dhabi-based International Holding Company PJSC in April last year.

The current round of fundraising, once finalised, will be the first for Adani companies after the Hindenburg attack and the ensuing market rout. A successful share sale would go a long way toward cementing Adani’s recovery from the crisis, though much would also depend on the terms of the deal and the profile of investors.