Adani taps Morgan Stanley to help sell Australia port stake

Will use funds to finance $6.2 bn mine, rail and port project

Adani has appointed Morgan Stanley to advise on the possible sale of a stake in its Abbot Point coal port in Australia, as it looks to raise funds to help finance a A$7 billion ($6.2 billion) mine, rail and port project.

Adani spokesman Andrew Porter confirmed the company has hired Morgan Stanley to help it on a potential partial sale of Abbot Point, a 50 million tonne-a-year coal terminal on the east coast of Australia that it bought for $2 billion in 2011.

Funds raised from the stake sale would help finance Adani's planned expansion of the port, Porter said.

Earlier this year, Morgan Stanley advised the Australian state of New South Wales on the sale of the Port of Newcastle, the world's largest coal export terminal, which fetched A$1.75 billion, double the amount that had been widely expected.

Adani's comments came after the Wall Street Journal reported that while Morgan Stanley was advising on the port sale, the bank was among four major US investment banks that had told a US-based green group, Rainbow Action Network, that they would not help fund the port's expansion.

The east coast port expansion to handle two rival coal projects planned by Adani and India's GVK with Australian billionaire Gina Rinehart has sparked an outcry from green groups and tourist operators opposed to coal projects and port dredging near the World Heritage-listed Great Barrier Reef.

The $17 billion worth of projects in the undeveloped Galilee Basin have been at the centre of a campaign by anti-coal activists pressing institutional investors and big banks to shun coal investments to help combat climate change.

"Stopping Abbot Point is a top priority for us, because this single project is the key to whether one of the largest stores of carbon on the planet, the Galilee Basin, stays in the ground where it belongs, or is sold on the global market and released into our atmosphere," said Amanda Starbuck, a director at San Francisco-based Rainforest Action Network.

Morgan Stanley said on Tuesday it was not necessarily opposed to the Abbot Point expansion, but it typically does not provide financing for any projects in Australia.

"In the case of the various Galilee Basin coal, rail and port developments, we have not looked at these projects in any detail nor have we assessed or opined on the environmental considerations surrounding them," Morgan Stanley's Australian spokesman Hugh Fraser said.

"We are simply not in the business of providing greenfield project financing in Australia and therefore, as we have stated, we will not lend to, or invest in, these projects."

Adani is expected to tap Australia's big four banks and others to help fund its Carmichael project in Queensland state, which most analysts say would be hard to justify at current coal prices, hovering at five-year lows.

(1 US dollar = 1.1362 Australian dollar)