Adani Group Unveils Ambitious 7 Trillion Rupees Infrastructure Investment Plan
From Diverse Ventures to Mega Investments, Adani's Path to 80 Lakh Crore Rupees in 25 Years
2 December 2023
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Kunal Tyagi
Adani Group plans a monumental investment of 7 trillion rupees ($84 billion) over the next decade for diverse infrastructure projects, as revealed by CFO Jugeshinder Singh.
Adani Group considers divesting its 44% stake in Adani Wilmar, a joint venture with Wilmar International, following consecutive quarterly losses, with a decision expected within the next three months.
To fund their ambitious plans, Adani Group outlines a fundraising strategy, intending to raise 80% of capital through global debt issuances and the remaining 20% from domestic sources, tapping into both domestic and international bond markets.
In a bold move, India's Adani Group announced its ambitious plan to invest a staggering 7 trillion rupees (approximately $84 billion) over the next decade in various infrastructure projects. The disclosure was made by Chief Financial Officer Jugeshinder Singh during an industry event in Mumbai. While specifics on the projects were not provided, Singh emphasized the group's commitment to developing and running infrastructure, showcasing their role as a key player in India's economic landscape.
Diversification and Stake Sale Considerations
Adani Group, led by billionaire Gautam Adani, is known for its diverse portfolio, encompassing India's largest private port, airports, roads, and joint ventures such as Adani Wilmar with Wilmar International. Singh indicated that the conglomerate is actively considering divesting its 44% stake in Adani Wilmar in the next three months. The move comes on the heels of Adani Wilmar's consecutive quarterly losses, prompting a strategic reevaluation of the group's investments.
Navigating Challenges and Denying Allegations
Adani Group has faced challenges, with a significant market capitalization loss following concerns raised by Hindenburg Research regarding debt levels and tax havens. The conglomerate vehemently denied all allegations. Singh addressed questions about increased costs of funds post-allegations, asserting that the weighted average cost of capital for their core infrastructure business has remained stable between 9.25-9.50%.
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Fundraising Strategy and Market Expansion
To fuel its ambitious plans, Adani Group outlined a comprehensive fundraising strategy. Around 80% of the required capital is expected to come from the global capital market, with the remaining 20% sourced domestically. Adani Group companies, including Adani Ports and SEZ, Adani Green Energy, and Adani Power, are set to tap into both domestic and international bond markets to raise funds. Singh hinted at a potential public issue of bonds starting from February.
Consolidating Leadership and Addressing Vendor Pool Challenges
With an eye on consolidating its position as a major infrastructure player in India, Adani Group is confident in its capacity to invest up to 20 lakh crore rupees. However, Singh acknowledged the current hurdle of a lack of high-quality vendors and emphasized that as the vendor pool develops, the group's capital expenditure is likely to increase. He expressed optimism that, with strong execution and operational capabilities, Adani Group could potentially invest up to 80 lakh crore rupees over a 25-year period.
Adani Group's Track Record and Future Outlook
Adani Group's flagship company, Adani Enterprises Ltd., has played a pivotal role in developing infrastructural assets across various sectors. The conglomerate has reported substantial growth in its ports, renewables, and energy solutions businesses, showcasing the robustness of its diversified portfolio. As Adani Group charts an ambitious course for the future, it remains to be seen how its strategic investments and fundraising efforts will shape the landscape of India's infrastructure development.
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