No single entity is expected to win the investment bid, and the Adani group may acquire shares in the edible oil maker to multiple buyers, the people cited above said on condition of anonymity.
“Apart from Wilmar, there are at least four global funds that want to buy Adani’s stake in Adani Wilmar, and the plan is to finalize the deal by the end of FY24,” the first person added. Mint could not ascertain the names of the other two funds.
Wilmar and Adani hold 43.97% each in the joint venture (JV). While the Adani group holds the promoter stake through Adani Commodities Llp, the Singaporean edibles giant holds it through Lence Pte Ltd.
“The (Adani) group tends to shift focus from non-core businesses such as commodities and retail consumer goods to core infrastructure, energy, ports, logistics and cement businesses,” the first person said, adding that Adani Wilmar may be spun off after. the transaction.
The company’s current promoter is well above the regulatory limit of 75%, and its new investors may have to come up with a plan to meet it.
“Any change in promoter may require a mandatory open offer to acquire up to 100% shares and then list at least 25% shares of the company again to remain compliant and listed. Or, Wilmar along with others may buy back all shares from the public and delist,” added the second person.
A spokesman for Wilmar International declined to comment. Emails sent to Adani group, GQG and QIA representatives remained unanswered.
Wilmar, among the most valued companies in Singapore’s SGX, produces edible, consumer products, prepared and ready-to-eat central kitchen products with more than 500 factories and a distribution network covering China, India, Indonesia and 50 others. countries
Among the suitors, while Wilmar is already a key edibles player in India through its JV with Adani, GQG Partners, a US retail management firm led by Rajiv Jain, and Doha-based sovereign wealth fund QIA have significant investments in Adani group. companies
Since March 2nd, GQG partners have flown in at least ₹37,440 crore into five Adani group companies, with the last part of ₹8,811 crore on 16 August in Adani Power Ltd. In the same month, QIA invested $500 million for a 2.5% stake in Adani’s listed renewable energy arm Adani Green Energy Ltd. Much of their investment came after the January 24 report of a US-based short. -vendor Hindenburg Research which hammered Adani group shares and stripped them of $150 billion in investor wealth at one point.
The report forced the Adani group to change its strategy by lowering leverage levels and focusing more on energy and infrastructure-related businesses. The group, which operates the country’s busiest international airport in Mumbai and won a bid to redevelop Asia’s largest Dharavi slum in the city, also aims to double its cement production capacity to 140 million tonnes per annum (mtpa) by 2028.
On 4 August, Mint reported that Adani will invest $4-5 billion to expand its cement capacity to over 100 mtpa in two years through greenfield and new acquisitions. On 17 October, The Economic Times reported that the Adani group is in talks to buy the cement businesses of debt-laden Jaypee Associates Ltd.
According to the two people quoted above, the Adani group wants to acquire the cement business of Jaypee Associates for around. ₹4,500 crores.
Under the latest strategy, the funds from the sale of the stake in Adani Wilmar could be used to build a war chest to partly fund the massive $4-5 billion Dharavi redevelopment project through insider charges, the two people said.
“The country’s ready-to-eat food business, packaged edibles business and kitchen consumer goods business are clearly growing. And, the stock (Adani Wilmar) may be right at its fair level at the moment for a possible share sale deal, therefore any potential transaction in Adani Wilmar may close quickly,” said the head of an investment advisory firm.
Shares of Adani Wilmar fell from the record ₹878 seen on 28 April last year, much of the decline coming after the Hindenburg report. On 20 November, Adani Wilmar fell to its lowest at ₹285.8 on the BSE. On Wednesday, the stock closed 1.95% lower at ₹313.95, 45% lower than when the Hindenburg report hit.
With the cooking oil business facing margin pressure, Adani Wilmar has reported losses for two consecutive quarters. For the September quarter, the company announced a consolidated net loss of ₹130.73 crores.
The company’s consolidated total revenue fell to ₹12,331.20 crore during the July-September period of ₹14,209.20 crore in the corresponding period of the previous year.
During the September quarter of FY24, the cooking oils business accounted for 74% of the company’s total revenue from operations.
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