The Adani group rejected those claims and said it won through a competitive process. In a Jan. 21 statement, the government said Adani was the top bidder among 86 registrations, and the process was transparent. The nation’s Supreme Court is still hearing the dispute. The Adani group representative declined to comment.
Old Links
Like Modi, Adani hails from the western Indian state of Gujarat. About two decades ago, Adani publicly backed Modi when a crisis threatened to end the rising politician’s career. Modi was under attack by rivals and businessmen who accused him of failing to prevent bloody sectarian riots in his home state in 2002. Adani created a regional industry lobby and helped kick off a biannual global investment summit in Gujarat in 2003 that boosted Modi’s pro-business credentials.
“The connection between Modi and Adani dates back to 2003,” said Nilanjan Mukhopadhyay, a political analyst who wrote the biography “Narendra Modi: The Man, the Times.” “Adani’s fortunes will certainly take a beating” without Modi in power. Should that happen, he will start forging close ties with the new ruling party, Mukhopadhyay said.
Responding to his opponents, Modi said in a parliament speech last month that the role of private enterprise in the economy is as important as the public sector, and wealth creators are a necessity. The Adani representative declined to comment.
Deft Revamp
Buoyant credit markets helped fuel Adani’s expansion. Adani Ports & Special Economic Zone Ltd. sold a 10-year dollar bond in January at a 3.10% coupon, compared with 4.375% in June 2019. Adani Green Energy Ltd. signed a $1.35 billion loan facility last week from 12 banks including Standard Chartered Plc and Sumitomo Mitsui Banking Corp., one of the biggest renewable loans in Asia.
While Credit Suisse Group AG estimates the group’s gross debt jumped 29% to $24 billion in the six months through September from a year earlier, a spinoff and ring fencing of units in 2015 has provided comfort to creditors.
The biggest threat Adani faces is coal. Financial institutions around the world are increasingly under pressure to avoid funding energy projects using the dirtiest fossil fuel. Adani Enterprises is India’s biggest importer and also a contract miner for 101 million tons annually. His investments of more than $2 billion in Australia are running into challenges and delays, and could pose a risk to any of the units stepping in to fund the development.
“Adani knows that coal is a stranded asset,” IEEFA’s Buckley said.
Cutting Imports
Adani’s new ventures face far fewer headwinds. He has plans for defense manufacturing, heeding Modi’s calls to help cut reliance on expensive imports. He is also scaling up production of solar panels and modules, again under Modi’s “Make in India” appeal. The foray into data centers follows the government’s proposed law that requires data to be stored locally.
Adani’s penchant for attracting foreign capital also jibes with the priorities of a Modi administration that doesn’t have a large enough budget to finance its infrastructure priorities. Warburg invested $110 million in Adani Ports and Special Economic Zone this month, while France’s Total took its total investment in Adani Green to $2.5 billion.
“All told, Adani Group is doing all the right things,” said Chakri Lokapriya, chief investment officer at TCG Asset Management Co. in Mumbai, whose fund recently sold its holdings in Adani units but is looking to buy again. “In coming years, Adani group will own controlling stakes in critical gateways to infrastructure, power generation and information technology.”
This article was provided by Bloomberg News.