Adani, Tata group companies look at stake-sales, bonds for funds

MUMBAI: Three companies from India’s two largest conglomerates are looking to raise funds amid their growth plans. Adani Energy Solutions (earlier known as Adani Transmission) plans to sell shares worth Rs 12,500 crore to institutional investors, while the board of sister company Adani Enterprises will meet on Tuesday to consider raising fresh capital. Tata Steel, part of the salt-to-software Tata Group, is also looking to raise money via non-convertible debentures (NCDs).
On Monday, Adani Energy Solutions’s board approved a fund-raise of Rs 12,500 crore through various instruments including qualified institutional placement (QIP) and will seek shareholders’ nod on the same on June 25, the day when it will also hold its annual general meeting.
Billionaire Gautam Adani and his family, who currently own 73% in Adani Energy Solutions, will see their stake diluted in the post-equity capital of the company. QIP is a less regulated route than a public market offering like follow-on offering (FPO) to raise money from institutions like banks and private equity funds. The move, if successful, will broaden Adani Energy Solutions’s shareholder count — one of the key criticisms against Adani Group companies — as well as increase its heft globally.
In May 2023, the board of Adani Energy Solutions had approved a fund-raising proposal of Rs 8,500 crore via QIPs. But the company did not go ahead with the proposal despite shareholders’ nod. A shareholder approval is valid for a year. And if the company plans to raise funds via equity, it will have to approach shareholders again for their consent.
Monday’s move by Adani Energy Solutions comes 11 days after it completed the acquisition of Essar Transco, a power transmission line running from Mahan electricity plant in Madhya Pradesh to Sipat pooling station at Bilaspur in Chhattisgarh, for Rs 1,900 crore. The company did not specify the reason for the Rs 12,500-crore fund-raise and the price at which the securities will be issued.
Adani Enterprises will discuss fundraising proposals at its board meeting today. In May 2023, the board of Adani Enterprises had approved a fund-raise of Rs 12,500 crore via QIPs. But like Adani Energy Solutions, Adani Enterprises too did not go ahead with the proposal despite securing shareholders’ approval. The board and shareholder approval for capital raising are enabling resolutions so that companies can act swiftly whenever they find the best financing terms. It’s not mandatory for them to raise this capital.
Tata Steel said its board is scheduled to meet on Wednesday to discuss fundraising via the issuance of NCDs on private placement basis. The steel major has been tapping the NCD route now and then. On Wednesday, Tata Steel will also announce its fourth quarterly earnings for FY24.