Abu Dhabi-based conglomerate International Holding Company (IHC) will invest $2 billion in three green companies of the Adani Group, helping tycoon Gautam Adani’s units fund their expansion plans.
Adani Enterprises Ltd, the flagship company of the group, will get Rs 7,700 crore (USD 1.02 billion) by issuing preference shares to IHC, while Adani Green Energy Ltd (AGEL) and Adani Transmission Ltd (ATL) will each receive Rs 3,850 crore through the same equity instrument, the group said in a statement.
However, he did not specify how much equity IHC will hold in the three companies. French energy giant TotalEnergies already owns 20% of AGEL and IHC’s interest reflects global investors’ eagerness to participate in part of the Adani Group.
“This is a landmark transaction that marks the start of a broader relationship between the Adani Group and IHC and attracts new investment from the UAE to India,” said Sagar Adani, Executive Director of AGEL. The boards of AGEL, ATL and AEL met and approved the transaction on Friday.
The investment is subject to shareholder and regulatory approvals and must comply with SEBI regulations. “IHC and the Adani portfolio are committed to growing the business partnership through multiple strategic opportunities in India, the Middle East and Africa,” the group said.
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The three Adani companies – AGEL, ATL and AEL – are market leaders in their business sectors and cover the green portfolio of the Adani Group. Each of these three companies integrates essential aspects of ESG into their operations. This investment demonstrates the shared vision and commitment of IHC and the Adani Portfolio to invest in sustainable businesses that are leading the charge in the energy transition.
Syed Basar Shueb, CEO and Managing Director of IHC, said: “This will be a long-term investment in India, as the country is home to many innovations globally, especially in the green energy sector. The opportunity to get a compelling return on investment in green energy has never been greater. We are confident that Adani’s companies will play an important role in unlocking India’s full green energy potential, a positive reflection of our shareholders’ commitment.
The transaction is expected to close within a month after obtaining all necessary approvals. The capital will be used to further grow the respective businesses, further strengthen the balance sheet and for general corporate purposes.
While AGEL is a renewable energy company with a portfolio of 20.4 GW, ATL is the commercial transmission and distribution arm with a combined transmission network of 18,875 circuit kilometers. AEL is the incubation arm that focuses on creating emerging infrastructure companies, contributing to nation building and dividing them into separate listed entities.
Spencer Ng, vice president of Moody’s Investors Service, said ATL’s announcement was positive for credit. “If completed as announced, the proceeds from the shares would help alleviate some of the downward pressure on Adani Transmission’s credit metrics caused by its large portfolio of growth projects over the next 3-4 years. “, said Spencer.