Gautam Adani is seeking to sell a stake in his cement business worth about $450mn, as part of efforts to reduce debt and restore investor confidence in his conglomerate.
Three people with direct knowledge of the plan said that Adani on Thursday made a formal request to international lenders to sell 4 to 5 per cent of Ambuja Cement.
Adani, which owns 63 per cent of Ambuja Cement, has not disclosed who would buy the stake and the plan is not finalised, it added. A fourth person confirmed the talks without disclosing details.
Adani’s move to sell down its Ambuja holding comes after a report by US short seller Hindenburg Research alleging fraud and stock market manipulation wiped $145bn from the market value of the conglomerate’s listed companies. The group has denied the allegations and has said servicing its $24bn of net debt will not be an issue.
If it went ahead, the Ambuja stake sale would mark the group’s first asset sale as it works to reduce its debt.
An Adani Group spokesperson declined to comment.
Ambuja shares closed at Rs384.3 on Thursday, which would have made a 5 per cent stake worth about $465mn.
Adani has dismissed concerns about its debt levels, pointing out that it has never defaulted and that its operating companies make sufficient cash to comfortably cover interest payments.
The conglomerate has paid off around $2bn worth of loans pledged against the shares of Adani’s listed companies since the short-seller report was released in late January. The group said it intended to “pre-pay all share-backed financing” by the end of this month.
Adani’s $10.5bn deal for Holcim’s Indian assets Ambuja Cement and ACC, a subsidiary, was India’s biggest-ever infrastructure and materials acquisition and made Adani India’s second-biggest cement player overnight.
A consortium of 14 international banks provided $4.5bn in financing, led by Barclays, Standard Chartered and Deutsche Bank.
Adani has already paid back a $500mn bridge loan, which was part of this package and due to mature early this month, two people familiar with the matter said.
“The philosophy has been that they don’t, generally speaking, divest,” said a person familiar with the company’s thinking. “But they understand that they have multiple businesses and I think that debate is on.”
This month, a private Adani family entity sold $1.9bn worth of shares in four listed group companies to Florida-based asset manager GQG Partners, which is listed in Australia.
The potential sale follows Adani’s global roadshow with bondholders over the past two weeks.
The Adani Group told bondholders in March it had access to a $3bn credit line from backers including at least one sovereign wealth fund, according to people familiar with the discussions. The group said that the media reports were “sheer speculation”.
Additional reporting by Simeon Kerr in Dubai
