SINGAPORE, Dec 31 — India’s Adani Group is exiting its consumer goods joint venture with Singapore’s Wilmar International in a US$2 billion (RM8.9 billion) deal as it looks to bolster its infrastructure business.
The divestment marks the Indian conglomerate’s first major transaction since the US indictment of its billionaire founder in November and will see Wilmar acquire the group’s 31 per cent stake in Adani Wilmar at a per-share price not exceeding 305 rupees.
The price is a 7.2 per cent discount to Adani Wilmar as of yesterday’s close and values the portion being sold to Wilmar at US$1.44 billion.
Adani will sell its remaining 13 per cent stake in the edible oil maker in an offer for sale to comply with India’s minimum public shareholding requirements, according to a company statement. Public shareholders already own about a 12 per cent stake in Adani Wilmar.
Adani Group has been looking to exit the Wilmar business for quite some time as it does not align with the group’s portfolio of being an infrastructure major, said Deven Choksey, managing director at DRChoksey Finserv.
The deal comes a month after US authorities accused founder Gautam Adani and some top executives of being part of a scheme to pay bribes worth US$265 million to secure Indian power supply contracts. The Adani Group has called the charges “baseless”.
However, the indictment had major ripple effects as French oil major TotalEnergies decided to pause investments in the group, Adani Green shelved a US$600 million bond issue, while credit rating agencies flagged risks to the group’s access to funding.
The proceeds from the stake sale will be used to boost its core infrastructure business, Adani said.
Adani, which is present in segments such as renewable energy, coal, airports, defence, aerospace and cement among others, has already committed investments worth billions of dollars in these areas.
The deal will be funded from internal sources and bank borrowings, Wilmar said in a separate statement, adding that it will explore opportunities to bring in “strategic investors” for Adani Wilmar, set up in 1999 and listed on Indian exchanges in 2022.
The Indian subcontinent, including Bangladesh, Sri Lanka, and Pakistan, offers “tremendous growth potential” for the agri-food businesses, Wilmar said.
Adani Wilmar, among India’s top edible oils and food companies with 24 factories in 15 Indian cities, will be given a new name after the deal.
Adani Enterprises’ shares closed nearly 8 per cent higher after the announcement. Adani Wilmar shares, which are down about 7.4 per cent this year, closed little changed at 328.75 rupees. — Reuters
