(Jan 30): Abu Dhabi’s International Holding Co will invest about US$400 million in Adani Enterprises’ follow-on share sale, saying it was confident in Indian billionaire Gautam Adani’s business empire even after almost US$70 billion was wiped off its market value.
The funding from IHC, which is controlled by a key member of the emirate’s royal family, will represent about 16% of Adani Enterprises’ offering and follows an almost US$2 billion investment in Adani’s companies last year.
“Our interest in Adani Group is driven by our confidence and belief in the fundamentals of Adani Enterprises,” IHC Chief Executive Officer Syed Basar Shueb said. “We see a strong potential for growth from a long-term perspective and added value to our shareholders.”
IHC’s investment comes as Adani seeks to restore confidence in his ports-to-power business following a scathing report by US-based short seller Hindenburg Research. It accused the conglomerate of market manipulation, accounting fraud and operating a web of controlled offshore shell entities in tax havens.
Adani Group issued a 413-page rebuttal on Sunday, but his efforts to restore confidence in his empire appear to be falling flat with investors, as stock-market losses deepened and key dollar bonds sank to fresh lows.
Still, IHC — which itself has struggled to entice international investors, some of whom privately expressed concerns about a lack of transparency — appears to be standing by the businessman, building on an April investment when Adani Enterprises raised 77 billion rupees (US$944 million) by issuing preferential shares to IHC. Adani Green Energy Ltd and Adani Transmission Ltd also received 38.5 billion rupees from the Abu Dhabi-based firm.
Other investors including Maybank Securities Pte, Abu Dhabi Investment Authority, State Bank of India Employees Pension Fund and Life Insurance Corp of India also plan to buy stock in Adani’s follow-on share sale. Bloomberg News first reported IHC’s interest in Adani’s share sale last week.
‘Based on facts’
On Friday, IHC said its business decisions are based on facts after the Hindenburg report was published. Shares in IHC fell as much as 5.2% on Monday before erasing all losses by the close.
With investments ranging from Elon Musk’s SpaceX, to a local fishery and Abu Dhabi’s largest property developer, IHC is at the forefront of a drive to diversify the UAE economy and deploy its oil windfall overseas.
The company, whose market capitalization has rocketed to US$239 billion since 2019, is controlled by the Royal Group, a conglomerate that lists Sheikh Tahnoon bin Zayed al Nahyan — the UAE’s national security adviser and brother to the president — as its chairman. The company hasn’t been included in the global MSCI index and isn’t covered by any stock analysts tracked by Bloomberg.
IHC is watching the international market closely for new prospects, and will continue exploring further opportunities outside its traditional market this year, CEO Shueb said in the statement on Monday. It will also explore business opportunities in Europe, Africa, Asia, and South America.
