Gautam Adani weighs $5 billion fundraise as banks urge deleveraging

The Adani group was courting sovereign wealth funds to raise roughly $5 billion in equity across its sprawling business empire and reduce leverage, people familiar with the matter said.

The network of companies owned by Asia’s richest person Gautam Adani had reached out to top officials at firms including Mubadala Investment and Abu Dhabi Investment Authority, the people said, asking not to be identified as the information is private. Adani’s group was looking to other large investment funds in West Asia as well as in Canada to invest, they said. The group had even discussed raising as much as $10 billion, one of the people said. The group’s flagship firm Adani Enterprises was considering issuing $1.8 billion to $2.4 billion in new shares next year, Bloomberg reported Tuesday.

The $5 billion to $10 billion target would include the funds raised in the potential Adani Enterprises share issue, one of the people said. The company’s board will meet November 25 to discuss raising funds, Adani Enterprises said in an exchange filing Tuesday.

Deliberations are ongoing and no final decisions have been made, the people said.

The equity fundraising plans are part of what the Adani group calls its systematic capital management program, which has been in place since 2019 and under which the Qatar Investment Authority and Abu Dhabi-based International Holding have previously invested in the Indian group. The fundraising will start with Adani Enterprises and is separate from the group’s plans to raise debt, one of the people said.

Other potential investors approached include the Qatar Investment Authority as well as funds linked to Abu Dhabi’s Sheikh Tahnoon Bin Zayed Al Nahyan, who oversees the Royal Group conglomerate and sovereign wealth fund ADQ, the people said.

Representatives for Adani group, Mubadala, ADQ and ADIA declined to comment.

A spokesperson at QIA declined to comment while Royal Group didn’t immediately respond to messages seeking comment.

Bankers urged the group to raise this much equity in order to improve the group’s debt ratios, two of the people said. The issuance would also boost the liquidity of the companies’ stocks, addressing two of the most frequent criticisms against the ports-to-power conglomerate. The research firm, CreditSights, had red-flagged the Adani Group’s “elevated” leverage in September. The conglomerate had pushed back against the report, calling their companies’ leverage ratios “healthy.”

Adani’s potential move mirrors a push by fellow Indian billionaire Mukesh Ambani, who raised more than $27 billion in 2020 from global investors by selling stakes in units of his conglomerate Reliance Industries Ltd.

Getting future ready

• Looking at other large investment funds in West Asia and Canada
• The $5-billion target would include the funds raised in the potential Adani Enterprises share issue
• Bankers urged the group to raise this much equity in order to improve debt ratios