Aani Group, India's ports-to-power conglomerate, has decided to reduce its acquisition activities due to the global rise in capital costs. With a renewed focus on existing projects, the company aims to ensure efficient utilization of funds. Learn more about Adani's strategic shift and its plans for the future.
Adani Group Adjusts Strategy, Prioritizes Existing Projects
MUMBAI: In response to the global surge in capital costs, Adani Group, a leading Indian conglomerate with diverse interests, has announced its decision to temporarily slow down on acquisitions. The conglomerate, which has experienced rapid growth through asset acquisitions, plans to shift its focus to existing projects.
Following a period of market turbulence caused by a report from U.S. short-seller Hindenburg, which alleged tax haven misuse and raised concerns about debt levels, Adani Group's listed shares in India have regained approximately $50 billion in market capitalization. The company promptly dismissed the report as baseless and received substantial investor support, subsequently repaying its debt obligations.
With a worldwide decline in debt financing markets and stock market volatility, merger and acquisition activity has decelerated across the globe. Moreover, the decisions made by global central banks to increase interest rates have compelled numerous companies to abandon proposed acquisitions.
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Under the leadership of billionaire Gautam Adani, the Adani Group has expanded rapidly in recent years, leveraging as many as 30 acquisitions across various key sectors. Notable deals include the acquisition of cement assets worth $10.5 billion from Swiss giant Holcim and the takeover of Indian TV network NDTV.
While the group will continue to assess potential acquisition opportunities, an Adani spokesperson acknowledged that the high cost of debt will influence decision-making. "The cost of debt and capital has gone up... This is the first time this is happening in the last five to six years. So this year, you will generally see less activity on the M&A side," the spokesperson stated.
Recently, Adani Enterprises, the flagship company of the group, canceled its planned acquisition of Macquarie Group's two road assets valued at $375 million. Additionally, Adani Group announced the completion of a $2.65 billion debt reduction program earlier this week.
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Over the next nine months, Adani Group intends to concentrate on existing projects, ensuring that the funds raised are effectively utilized. The spokesperson refrained from providing specific details regarding these projects.
Following the Hindenburg report's impact on Adani's share sale plans in February, the company has now revealed its intentions to raise $2.57 billion; however, the spokesperson declined to comment on the timing or potential discussions with investors.
Adani Group has engaged with investors to outline its business plans and secure funds. Despite a turbulent market for its shares, the group successfully obtained $2.3 billion in loans from banks in recent months, the spokesperson confirmed.
With a renewed emphasis on the cement sector, Adani Group intends to explore multiple greenfield opportunities. Although the group's shares have partially recovered since the Hindenburg report, they still reflect a decline in market value exceeding $100 billion compared to January's figures. In a favorable development for Adani, a panel appointed by the Supreme Court and tasked with investigating the Hindenburg allegations reported no substantial findings in May.
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