Asia’s richest man makes $6.9 billion bet to silence debt-obsessed critics

2 weeks ago 35

MUMBAI - Gautam Adani’s plan to raise at least US$5 billion (S$6.9 billion) in equity aims to shut down two of the most frequent criticisms leveled against the Indian tycoon’s swelling empire: high debt ratios and a limited investor base.

After four years of eyebrow-raising gains - some Adani Group shares surged more than 2,000 per cent - Asia’s richest person is embarking on a fundraising campaign that will likely include a local share sale as well as buy-in from large investment funds in the Middle East and Canada. An equity injection of this size is expected to help the conglomerate deleverage and Bloomberg Intelligence sees a successful equity raise across the group supporting the companies’ dollar bonds.

The billionaire is seeking legitimacy in the face of questions about his group’s breakneck expansion from a traditional port operator to a sprawling empire with assets including media, cement and green energy, that critics say has boosted leverage and financial complexity. With this fundraising, in one fell swoop Mr Adani can improve debt ratios, broaden his investor base, improve stock liquidity and trigger wider analyst coverage for a conglomerate that’s surprisingly under-covered despite the outsized stock gains.

“The fundraising exercise by Adani Group is putting the naysayers in place,” said Sanjiv Bhasin, director at brokerage IIFL Securities. “He is embarking on a new fund drive that will boost the credibility of the group and allay the fears of investors.”

Yet questions remain over what kind of investors Mr Adani will be able to attract, and whether they can be persuaded to buy in at the astronomical valuations his units trade at. The Adani Group declined to comment.

‘Lots of Questions’

Adani executives are courting global sovereign and pension funds, including Mubadala Investment, Abu Dhabi Investment Authority and the Canada Pension Plan Investment Board. The total fundraising size c...

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