Gautam Adani is looking to offload a share in his cement enterprise valued at roughly $450 million, as a strategy to decrease debt and reestablish investor trust in his conglomerate, a report published in Financial Times said.
According to three individuals who have firsthand information about the matter, Adani submitted a formal proposal to global financiers on Thursday, requesting authorization to divest 4 to 5 per cent of Ambuja Cement.
Adani, who possesses a 63 per cent stake in Ambuja Cement, has not revealed the identity of the potential buyer for the stake, and the proposal has not been finalized yet, according to the sources. A fourth source confirmed the discussions but did not provide any further information.
In the event of its execution, the sale of Adani’s stake in Ambuja Cement would signify the conglomerate’s initial asset divestiture, as it strives to decrease its debt burden.
The closing price of Ambuja shares on Thursday was Rs384.3, indicating that a 5% stake would have been valued at approximately $465 million.
Adani has addressed worries about its debt levels by highlighting its strong record of never defaulting and the ability of its operating companies to generate enough cash to easily meet interest payments.
Since the release of the short-seller report in late January, the conglomerate has repaid loans amounting to roughly $2 billion that was secured against the shares of Adani’s publicly traded firms. The group has announced its plans to completely prepay all share-backed financing by the conclusion of this month.
The acquisition of Holcim’s Indian assets, Ambuja Cement and its subsidiary ACC, for $10.5 billion was Adani’s largest-ever acquisition in the infrastructure and materials sector, and it propelled Adani to become India’s second-largest cement producer almost overnight.
A group of 14 global banks, including Barclays, Standard Chartered, and Deutsche Bank, led the way in providing $4.5 billion in financing.
According to two individuals with knowledge of the matter, Adani has already repaid a $500 million bridge loan that was set to mature in the early part of this month and was included in this financing package.
As per an individual familiar with the company’s thoughts, their philosophy has generally been to not divest. However, they acknowledge that they have several businesses and are currently debating whether to change this approach.
In a deal that took place this month, a private entity belonging to the Adani family sold $1.9 billion worth of shares in four publicly traded group companies to GQG Partners, an asset manager based in Florida and listed in Australia.
Financial Times quoted individuals with knowledge of the matter as stating that the Adani Group informed its bondholders in March that it had access to a $3 billion credit line from backers that included at least one sovereign wealth fund. However, the group dismissed media reports regarding this matter as “sheer speculation.”
