Adani Group Implements Comeback Strategy, Increases Stake in Listed Firms Amidst Controversy
Amidst a string of damaging reports earlier this year, the Adani Group is implementing a strategic plan to make a comeback. The group has decided to increase its stake in two listed companies, Adani Enterprises and Adani Ports and Special Economic Zone (APSEZ), as part of its claw-back strategy.
The Gautam Adani-led promoter group has raised its stake in Adani Enterprises from 69.87% to 71.93%, marking the second time within a month that promoters have increased their stake in the flagship firm. As for APSEZ, the group’s stake has risen to 65.23% from 63.06%.
The Ambani Group’s decision comes after being hit by damaging reports from Hindenburg Research, which alleged accounting fraud, improper use of tax havens, and stock price manipulation. These allegations led to a significant decrease in the group’s market value as approximately $150 billion was wiped out.
To address the concerns about cash flows and regain investor confidence, the Adani Group has developed a comprehensive claw-back strategy. This strategy includes scrapping acquisitions, reassessing its ambitions, pre-paying debt, and scaling back spending on new projects.
Despite the allegations, US-based investment firm GQG Partners has increased its stake in five of the Adani Group firms. GQG purchased a 5.03% stake in APSEZ through a bulk deal and acquired stakes in Adani Power, Adani Enterprises, Adani Green Energy, and Adani Transmission as well. The firm has invested a total of Rs. 38,700 crore in Adani Group firms since May.
As part of its comeback strategy, the Adani Group plans to conduct stake sales by promoters and primary issuances through share sales to investors. Adani Enterprises aims to raise Rs. 12,500 crore, Adani Transmission plans to raise Rs. 8,500 crore, and Adani Green Energy intends to mop up Rs. 12,300 crore. Leading investors such as Qatar Investment Authority (QIA) and Bain Capital have already shown their trust in the group by investing Rs. 4,100 crore and Rs. 1,440 crore respectively in Adani Green Energy.
The Adani Group’s decisive actions and partnerships aim to rebuild investor confidence and move past the recent controversies. With a focus on addressing concerns and implementing an effective claw-back strategy, the group is determined to emerge stronger than ever.
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