New Delhi: Billionaire Gautam Adani-led ports-to-energy conglomerate Adani Group has reportedly started initial discussions to bifurcate its airport business from holding entity Adani Enterprises Ltd (AEL) in a bid to list the entity separately.
With investments in infrastructure, transportation, utilities, and energy, the Ahmedabad-based conglomerate is likely to raise $500 million via a private placement of shares in Adani Airports Holdings before a final initial public offering (IPO). The group took control of India’s second-busiest airport of Mumbai as well six regional facilities, and is eyeing a valuation of Rs 25,500-29,200 crore ($3.5-4 billion) for the business, people familiar with the matter told ET. In 2019, the group entered the airport sector.
Citing a person with direct knowledge of the matter, the publication reported that talks were held between top company executives and potential investment bankers. Recently, six global banks and several domestic bankers have met top officials. “However, the group is awaiting better air passenger numbers as the Covid pandemic significantly reduced passenger traffic. They would like a year-end listing,” he added.
It is worth noting that the conglomerate has made its presence felt in the airports business within a period of two years. Earlier, Adani Airports won the mandate to modernise and operate six airports—Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram. Plus, Adani Airport Holdings Ltd (AAHL) acquired an additional 23 per cent stake in Mumbai International Airport Ltd. (MIAL) in February this year, which manages Chhatrapati Shivaji Maharaj International Airport. This provided Adani ownership of the upcoming Navi Mumbai Airport, in which MIAL holds 74 per cent stake.
Adani Airports has a debt of Rs 4,100 crore while that of Adani Enterprises Ltd (AEL) amounts to Rs 15,293 crore.
“In the three-five year plan, we would have a total capex in the airports of about Rs 30,000 crore estimated and the debt from that will be approximately Rs 20,000 to 21,000 crore,” according to the financial daily which cited AEL chief financial officer (CFO) Robbie Singh's statement made at an investor call in May. “They are cash-making businesses and they already operate. They have their own capacity to borrow, so from our point of view, our commitment is to the equity portion of the airports, of which a majority of what equity was required we've already invested.”
Worth mentioning here is that after airports, the group has ventured into the business of developing railway stations, and the Indian Railway Stations Development Corporation Ltd (IRSDC) has shortlisted the Adanis and eight others to submit their proposals to redevelop the iconic Chhatrapati Shivaji Maharaj Terminus (CSMT) railway station in Mumbai. The group has an overall debt of over Rs 1.47 lakh crore, following several acquisitions in the port, power and airport sectors.
Kapil Kaul, CEO and director, CAPA Advisory, told the business daily: “Long-term fundamentals for Indian aviation remain very solid in spite of the short-term impact of Covid pandemic. Given there is a lot of capital available right now which is chasing high return assets, raising funds will not be a challenge.”
In the past, the group had hived off many subsidiary businesses —Adani Green, Adani Power Transmission, and Adani Total Gas—and raised equity through strategic stake sales to both financial and strategic investors such as Qatar Investment Authority and Total of France to boost shareholder returns.
As of 10:25 am, Adani Enterprises shares traded 0.42% higher at Rs 1,601.35 apiece. In the last one year, Adani Enterprises shares have rallied 957%.
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