The Adani Group intends to sell a 4-5% stake in Ambuja Cement for around $450 million as part of its aim to reduce debt and restore investor trust in the company.
The shares are expected to be sold in the secondary market next week, with a 5% stake sale fetching the promoters roughly ‘3,400 crore at the present market price. Ambuja’s stock closed (Friday’s) trading session at 378.35, down 1.66% from the previous day’s close.
Adani acquired Ambuja Cement and its subsidiary ACC in mid-May last year from Holcim, the Swiss cement company, for $10.5 billion (about Rs 81,360 crore), including open offers to minority shareholders.
The Adani own 56.7% in ACC. While Gautam Adani is the chairman of Ambuja Cement, Karan Adani is the chairman and non-executive director of ACC.
A group of 14 international banks, including Barclays, Standard Chartered, and Deutsche Bank, contributed $4.5 billion to the transaction.
FT reported that Adani had already paid back a $500 million bridge loan which was part of this deal and was expected to mature early this month.
The stock prices of the group’s companies have been under tremendous pressure since a report by US short-seller Hindenburg Research in late January alleging fraud and stock market manipulation by the company. The conglomerate’s listed companies lost more than $150 billion in market value; however, the company has denied the allegations and stated that servicing its $24 billion in net debt will not be a problem.
Earlier this month, the Adani promoters sold $1.9 billion in shares in four publicly listed companies to Florida-based asset management GQG Partners, which is also listed in Australia. The company stated that it planned to “pre-pay all share-backed funding” by the end of March.
Since the Hindenburg report, the Adani group has prepaid around $2 billion on share-backed loans and made on-time bond repayments. That has aided the stock prices of the group’s firms recover over the past week. Adani management has also been doing roadshows to persuade investors that it will produce enough cash to repay all of its borrowings.
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