The Rise and Rise of Gautam Adani in the Last 02 Years

Gautam Adani, who has had a spectacular rise in fortunes in the last few years, saw his wealth almost doubling to USD 32 billion in 2020

Forty Indians entered the billionaires’ club in the pandemic-stricken 2020 to take the number of those in the coveted list to 177 people, a report says report. Mukesh Ambani continued to be the wealthiest Indian with a net worth of USD 83 billion. The head of Reliance Industries witnessed a 24 per cent jump in fortunes and climbed up one spot to be the eighth richest globally, as per the Hurun Global Rich List.

Gautam Adani from Gujarat, who has had a spectacular rise in fortunes in the last few years, saw his wealth almost doubling to USD 32 billion in 2020 and climbed 20 places to be the 48th richest person globally and the second wealthiest Indian.

In 2021 so far, the Adani Group Chairman has beaten billionaires like Elon Musk and Mukesh Ambani to add the highest amount this year. Adani has added $16.2 billion to his net worth in 2021 so far, taking his total net worth to $50 billion as on Friday, as per Bloomberg Billionaires Index. He is followed by Google co-founders Larry Page and Sergey Brin, who have added $14.4 billion and $13.8 billion, respectively, to their net worth in 2021.

Change of Fortunes for the Former Coal Giant

After spending two decades building a business empire cantered around coal, Indian billionaire Gautam Adani is now looking beyond the fossil fuel to cement his group’s future. His ambitious plans are getting a boost from Prime Minister Narendra Modi.

Adani has emerged as India’s infrastructure king, diversifying from mines, ports and power plants into airports, data centres and defence — sectors PM Modi considers crucial to meeting India’s economic goals. Investors are rewarding the pivot, betting the tycoon’s strategy of dovetailing his interests with the government’s development program will pay off.

The group’s six listed units added a combined $79 billion to their market value in the past year at the height of a pandemic, capping the best 12 months in their history. That’s the most after the nation’s two biggest business empires, Tata group and Mukesh Ambani-led Reliance Industries Ltd. Blue-chip names including French oil giant Total SE and Warburg Pincus LLC have ploughed money into Adani’s companies.

In less than two years, Adani has gained control of seven airports and almost a quarter of India’s air traffic. He has unveiled plans to boost his renewable energy capacity almost eightfold by 2025, positioning himself to benefit as the government debates ambitious climate targets that would cut net greenhouse gas emissions by mid-century. Last week, he won a contract to co-develop a port terminal in Sri Lanka, a neighbour India is courting to check China’s influence in the region. Adani Enterprises Ltd. signed a pact last month with EdgeConneX to develop and operate data centres across India.

“Adani is politically savvy and invests in mostly sensible, long-dated infrastructure projects” broadly tied to government priorities, said Tim Buckley, director of energy finance for Australia and South Asia at the Institute for Energy Economics and Financial Analysis, or IEEFA. “So long as India sustains strong growth, the group is likely to prosper under his leadership and witness a surge in global investor interest.”

The focus on India’s infrastructure forms “the core of our ‘nation building’ philosophy” and the group has created thousands of jobs and delivered unprecedented value to its shareholders, Adani said at a JPMorgan India Summit in September. A representative for the group declined to comment for this story.

After starting out as a commodities trader in the late 1980s, Adani is now richer than Jack Ma and is India’s second-wealthiest person with a net worth of $56 billion. He added $50 billion to his fortune in the past year, about $5 billion more than Ambani, Asia’s richest man, according to the Bloomberg Billionaires Index. Adani’s net worth rose more than any other billionaire’s this year.

Adani’s new ventures face far fewer headwinds. He has plans for defence manufacturing, heeding PM Modi’s calls to help cut reliance on expensive imports. He is also scaling up production of solar panels and modules, again under PM Modi’s “Make in India” appeal. The foray into data centers follows the government’s proposed law that requires data to be stored locally.

Gautam Adani’s penchant for attracting foreign capital also jibes with the priorities of the PM 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. “Incoming years, Adani group will own controlling stakes in critical gateways to infrastructure, power generation and information technology.”

The Myanmar Military Coup Controversy

A military coup in Myanmar on Feb. 1 2021, and an ensuing crackdown on mass protests in which hundreds were killed drew international condemnation and sanctions on military figures and military-controlled entities. Interestingly, Adani Ports and SEZ Ltd in 2020, had won a bid to build and operate Yangon International Terminal, which it has said is an independent project fully owned and developed by the company.

The Australian Centre for International Justice and Justice for Myanmar on March 30 2021, released a report citing documents purporting to show that an Adani unit will pay up to $30 million in land lease fees for the project to Myanmar Economic Corporation (MEC). MEC was one of two military-controlled conglomerates sanctioned by the United States a week before this report came out, and other international firms including Japanese brewer Kirin had cut ties with the conglomerates since the coup.

Adani did not comment on the lease payments detailed in the report, but said the land acquisition for its project was facilitated by the Myanmar Investment Commission under the now-ousted civilian government. “Much like our global peers, we are watching the situation in Myanmar carefully and will engage with the relevant authorities and stakeholders to seek their advice on the way forward,” an Adani spokesman said in a statement at the time. The spokesman also said the company condemned violations of human rights and was working with independent think tanks to mitigate any human rights risks.

Yadanar Maung, spokesperson for Justice for Myanmar at that time said: “Adani Ports has continued its business in Myanmar, despite an illegal military coup and the military’s ongoing crimes against humanity. Adani Ports’ business partner in Myanmar, now sanctioned by the US, is committing crimes against humanity as they deliberately kill peaceful protesters, torture detainees and steal public assets.”

Maung claimed Adani Ports stands complicit in the military’s atrocities and corruption through their direct payments to a military conglomerate.

Similarly, Rawan Arraf, Executive Director at the Australian Centre for International Justice said: “We’ve studied several statements from Adani Ports since May 2019 regarding its deal in Myanmar involving the MEC and we have no confidence it will uphold its obligations to respect human rights and disengage from Myanmar.”

Notably, Adani’s port projects in Australia and India’s southern Tamil Nadu state have also been criticised by activist groups, politicians and locals over environmental concerns. Adani himself at that point said that he was building “sustainable” and “critical port infrastructure”.

Adani IPO

The Adani Group is now reportedly planning to list two more of its businesses on the Indian stock exchanges after the market capitalisation of its six listed companies surged by over 5 times in the last year. According to media reports, the airport and food businesses of the Adani Group could go public in the near future. The airports business is owned by Adani Enterprises as Adani Airports Holdings, while Adani Wilmar is a joint venture between the Adani Group and Singapore-based Wilmar International.

Currently, the Adani Group has six listed companies with a combined market capitalisation of over ₹8.5 lakh crore, skyrocketing from a little over ₹1.6 lakh crore last year. If listed, these two companies could help Gautam Adani beat Mukesh Ambani as the richest Indian. According to Forbes’ real-time billionaires’ list, Ambani is the richest in India with $85 billion wealth, while Adani is second with $75.4 billion wealth.

A report by The Economic Times stated that the airports business will be hived off into a separate entity before the listing process is undertaken. The report further adds that before the initial public offering (IPO) is launched, the Adani Group will raise $500 million (approx. ₹3,600 crore) for the business on a private placement basis. However, the ongoing Covid-19 crisis could temporarily play spoilsport.

“Discussions were held between top company officials and potential investment bankers. At least half a dozen global banks and a bunch of domestic bankers have met top officials recently. However, the group is awaiting better air passenger numbers as the Covid pandemic significantly reduced passenger traffic,” the report said, quoting an unnamed source, adding that the airport business listing is being targeted for the year-end.

The Adani Group currently operates six airports across India, servicing 10% of the country’s total air passenger traffic. In addition to this, the company acquired a 74% stake in Mumbai International Airport Ltd, which manages the Chhatrapati Shivaji Maharaj International Airport.

The Adani Group is also reportedly working on listing its food business, run under the name Adani Wilmar, a joint venture between the Adani Group and Singapore-based Wilmar International. According to a Money Control report, the Adani Group is planning to raise $1 billion (approx. ₹7,000 crores to ₹7,300 crores) through the IPO. Adani Wilmar owns the popular edible oil brand ‘Fortune’, and currently sells several other groceries like rice, wheat flour (atta), semolina (rawa), pulses among other things.

Quoting unnamed sources, the report added that the Adani Wilmar valuation could touch $8 billion to $9 billion. It says that the draft red herring prospectus (DRHP) could be filed as early as June or July. In an exchange filing earlier in March this year, Adani Enterprises said, “We would like to submit and clarify that the Company regularly evaluates all opportunities across its various businesses with the objective of enhancing shareholder value and this may involve discussions with various parties and stakeholders at different points in time.”

The Digpu News Bottomline

Amidst the pandemic, a large number of businesses have seen the sunset on them forever and a whole lot others have had to take drastic measures in order to keep surviving. On the other hand, the vision of Gautam Adani has led to him not only expanding his business but while doing so, he had been able to make a fortune out of it.

At the same time, allegations of indirectly investing in the military coup of Myanmar has not been great for the brand image of Adani. Allegations like these, if not proved false beyond a reasonable doubt, can very well result in the decimation of a business in the global market, irrespective of its size.

One cannot help but notice how Gautam Adani has been failing to disprove reports of his linkages with the Myanmar coup and at the same time, is planning on going big in the IPO sector. If any of this goes south, it will public at large who invest in the name of Adani that will take a hit and not the millionaire.

Is this a mere coincidence or a well thought out plan? While answering this question, we must not forget the brilliance of Adani’s mind that leaves nothing to chance.

All of this has happened as quickly as a little more than two years. Though his political alignment with the ruling BJP party has had a lot to do with it but isn’t a man of Adani’s standing only as good as his politics?

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