Gautam Adani: Terror attack survivor, Asia’s richest man, is now on to a mega FPO

Gautam Adani’s rise from humble origins as a small-time commodities trader in Gujarat to a business magnate is the stuff of Hollywood films. He is the world’s third richest and Asia’s richest man, with interests in ports, logistics, agri-business, power production, airports and defence.

Not surprisingly, his plan to roll out a follow-on public offering (FPO) for Adani Enterprises Ltd (AEL), his group’s flagship firm, is attracting wide attention. Like all things Adani, the FPO is a mega event — it will be the largest of its kind ever issued in India. AEL announced in November 2022 it would raise around ₹20,000 crore from retail and institutional investors.

An FPO is the issuance of shares to investors by a publicly listed entity. Its name comes from the fact that it follows an initial public offering (IPO). FPOs are also called secondary offerings. For AEL, the FPO comes on the heels of an 18-fold gain in its stock prices over five years. It will use the proceeds to finance projects, pay off debt or make acquisitions.

What happened on 26/11/08

Is Gautam Adani a lucky man? The events of November 26, 2008 do suggest that. That day, Adani was dining with friends at a restaurant of Taj Palace & Tower in Mumbai. Terrorists stormed the hotel and began taking down guests in the lobby. Adani got away after employees moved him and other guests to the kitchen and out of the hotel.

Adani later told a TV channel that had he exited the hotel from the lobby, he might have been on of the victims of the attack. 

Also read: Gautam Adani’s success secret: ‘It’s hard work, not Modi connection’

Fourteen years later, Adani, 60, appears to have dealt with his traumatic experience well, amassing wealth for his group and investors. In addition to being a leading participant in the infrastructure industry, his business owns 13 ports and eight airports. His wealth zoomed by $50 billion in 2022, bringing his total net worth to an estimated $127 billion, according to news reports.

Skyrocketing shares

Over the past five years, Adani’s fortune has skyrocketed. In the past year, the share prices of his many publicly traded firms have soared by more than fivefold. Four of the six companies have increased investor worth by more than ₹1 lakh-crore. In five years, shares of his flagship company, Adani Enterprises, have increased by almost 2,500 per cent.

Also read: Gautam Adani among 3 Indian billionaires on Forbes Asia’s ‘Heroes of Philanthropy’ list

Adani Green Energy’s share price increased by 6,823 per cent in five years, Adani Enterprises by 2,502 per cent, Adani Transmission by 1,288 per cent, Adani Total Gas by 897 per cent, Adani Power by 826 per cent and Adani Ports & SEZ by 126 per cent. If an investor had invested ₹1 lakh in each of these equities two years ago, her net worth would be ₹66 lakh.

One of Adani’s accomplishments is the creation of the privately-owned Mundra Port in Gujarat. The port, now the largest in India, was established by the Adani Group and the Gujarat government in a public-private partnership. The Mundra Port is an integral part of Adani’s ambitious plans to build a logistics and supply chain network that spans the entire Indian subcontinent.

Power: Mega investments

Adani has also made substantial power sector investments. The Adani Group operates many thermal power plants in India with a combined generation capacity of over 12,000 MW. In Rajasthan, the company is constructing one of the world’s largest solar power parks, with a planned generation capacity of 6,500 MW.

The consortium has met its goal of installing 25 GW of renewable energy capacities four years ahead of schedule.

Opinion: Green flag for green hydrogen sets India on the right path

Adani’s entry into the market for data centres is particularly noteworthy. The company announced in 2019 that it would invest $2 billion to build a data centre park in Maharashtra. It is anticipated that the data centre park will be one of the largest in the world, including an area of over 5,000 acres.

Adani’s entry into the data centre sector, which is anticipated to be a key growth area in the coming years, is a smart move that positions the firm well for the future. It has inked an MoU (memorandum of understanding) with Uttar Pradesh to establish the largest integrated defence production complex in South Asia.

Airports: Wide presence 

Additionally, the Adani Group owns and operates many airports throughout India. Adani Enterprises, a subsidiary, won the bid in February 2019 to run six major airports in India including in Ahmedabad, Lucknow, Jaipur, Guwahati, Thiruvananthapuram and Mangaluru.

The Indian government privatised these airports and solicited bids for their operation, management and development using a public-private partnership (PPP) model. Adani Enterprises won the bid following a competitive bidding process.

The privatisation of airports was part of the government’s aim to encourage private participation in the civil aviation industry. The process involved the 50-year transfer of the rights to operate, administer and construct airports to private firms.

Also read: Gautam Adani to invest $100 billion in new energy and data centres

Through its subsidiary Adani Airport Holdings, the Adani Group has invested in these airports by modernising and expanding existing infrastructure, increasing flight connections and enhancing passenger amenities.

In addition to adhering to the regulations issued by the Airports Economic Regulatory Authority of India (AERA) for pricing, financial and operational performance, the Adani group had to adhere to the regulations established by other authorities for safety and security, environment and social impact.

Controversies galore

Adani’s relationship with the Indian government has been the fodder for much controversy. He has been criticised for alleged close ties to the government, particularly with Gujarat-born Prime Minister Narendra Modi. He has been accused of receiving preferential treatment from the government in the form of land acquisition, environmental clearance and enterprise contracts.

The entrepreneur has also been criticised for his aggressive development plans, which have been interpreted as an attempt to control a variety of Indian businesses. Opponents have advocated for stricter regulation of the Adani Group, arguing that the company’s dominant position in numerous industries poses a threat to competition and the Indian economy as a whole.

Adani Group’s environmental and social practices have been criticised. Concerns have been raised, for instance, about the impact of the Mundra Port on the fishing population and the ecosystem as well as allegations of illegal land acquisition and breach of environmental regulations.

Similarly, the proposed coal mine in Queensland, Australia, by Adani Group has been a hot issue among the local populace, with detractors thinking it will harm the Great Barrier Reef and contribute to global warming.

However, Adani Group has stated that it has complied with all applicable laws and obtained all necessary licences and permissions.

Media interviews

In an effort to dispel rumours, Adani has given a series of interviews, beginning with the Financial Times, in which he denied claims of corruption but recognised that his organisation is aligned with government development ambitions. Recent interviews with India Today magazine and Rajat Sharma on Aap Ki Adalat reveal that Adani is attempting to portray himself as someone more interested in expanding his business empire than in socialising with politicians.

In November, he told the London-based Financial Times that the controversial acquisition of the highly regarded NDTV by his company, AMG Media Network, was part of plans to establish a global media conglomerate comparable to Al-Jazeera. Adani told the Financial Times: “Independence means if the government has done something wrong, you say it’s wrong. However, you should also have bravery when the government does the right thing every day. You must additionally state that.”

Also read: Gautam Adani’s brother Vinod is richest NRI with ₹1.69 lakh crore

He told Rajat Sharma in the TV interview, conducted in a courtroom setting with the interviewee questioned by a person posing as a lawyer, that his alleged close ties with Modi are unfounded because he works with several opposition-ruled states including West Bengal, whose Chief Minister is one of the most outspoken critics of the Prime Minister.

“I like to inform you that Modiji will never provide you with personal assistance. You can discuss national interest policies with him, but when a policy is made, it applies to everyone, not just the Adani Group,” he insisted.

Climbing debt 

Adani stated that throughout the past seven to eight years, the group’s income has climbed by 24 per cent while its loans have increased by 11 per cent, resulting in its assets being four times its liabilities.

He told India Today that Indian banks’ exposure to his conglomerate’s overall lending is merely 32 per cent. Nine years back, 86 per cent of the total debt was financed by Indian banks; today, that proportion has decreased to 32 per cent, he said. According to news reports citing the Adani Group, the group plans to be debt-free by the next fiscal.

CreditSights, a division of the Fitch Group and a global credit market research company, stated last year that the group is “seriously overleveraged” due to its reliance on debt to invest aggressively in both existing and new businesses. As of the end of FY22, the six listed Adani group companies had a total debt of ₹2,30,900 crore, according to the report.

Also read: $70-b investment will turn India to clean energy exporter: Gautam Adani

After accounting for cash on hand, the net debt was ₹1,72,900 crore. “Overall, the Group has been investing aggressively in both existing and new businesses, backed mostly by debt, resulting in elevated leverage and solvency ratios,” it stated.

Defence operations

The Adani Group, in response to the CreditSight report, stated that the group’s net debt at the end of the June quarter of 2022 was ₹1.6 lakh-crore, compared to ₹50,200 crore of run-rate EBITDA (earnings before interest, taxes, depreciation, and amortisation: It is a measure of a company’s financial performance that does not take into account non-operating decisions such as interest expenses, tax rates, etc.).

In addition, it stated that it had developed a systematic capital management plan, improved its net debt to operating profit ratio (better debt management) and diversified its borrowing book (to spread the debt among several entities).

Despite these charges that the company promotes crony capitalism, Gautam Adani has maintained a low profile while expanding the group’s global footprint.