Gautam Adani, Asia's richest man, is embarking on a fundraising campaign to raise at least $5 billion in equity, with the potential to reach $10 billion. This initiative is designed to counter criticisms regarding the Adani Group's high debt ratios and narrow investor base, especially as his conglomerate has expanded rapidly from a port operator to include media, cement, and green energy.
The fundraising efforts are expected to improve the group's debt ratios, broaden its investor base, enhance stock liquidity, and attract wider analyst coverage. Adani executives are reportedly targeting global sovereign and pension funds, including Mubadala Investment, Abu Dhabi Investment Authority, and the Canada Pension Plan Investment Board. The flagship company, Adani Enterprises, is valued at over 160 times its one-year forward earnings, significantly higher than Reliance Industries at about 21 times.
While some analysts, like Sanjiv Bhasin of IIFL Securities, believe the fundraising will boost credibility and alleviate investor fears, others express caution. Alice Wang, a portfolio manager at Quaero Capital, estimates Adani Enterprises' free float at about 10%, far lower than the reported 27%, raising questions about genuine liquidity improvement. Concerns also persist about the group's opacity, lack of disclosures, and astronomical valuations, with fund managers like Vikas Pershad of M&G Investments and Mohit Nigam of Hem Securities advising investors to be careful.
The equity plans are seen by Anish Teli of QED Capital Advisors as the first of many fundraises, crucial for the conglomerate's ventures into new, cash-hungry industries with long gestation periods. The goal is to emulate Mukesh Ambani's success in 2020, who raised over $27 billion by selling stakes in Reliance Industries units to global investors.
