Huge announcement: Adani Group to sell off $2bn stake in major joint venture! Find out more here

Unveiling the Editor’s Essential Weekly Selection

Roula Khalaf, the Editor of the renowned Financial Times, curates her top stories in the Editor’s Digest newsletter, offering a unique insight into the latest developments and trends shaping the world.

1. Adani Group’s Strategic Move:

• Adani Group, led by the prominent Indian billionaire Gautam Adani, has decided to part ways with its 44 per cent stake in a joint venture food business with Wilmar International from Singapore. This strategic decision comes in the wake of a recent indictment by the United States against Adani and company executives over an alleged multimillion-dollar bribery scheme.
• The joint venture, Adani Wilmar, which has been in operation for 25 years, boasts a market valuation of $5 billion. The divestment of approximately $2 billion from this stake sale will alleviate the financial constraints faced by the Indian conglomerate following the US charges.
• In light of this move, Adani Group plans to channel the fresh capital towards expanding its core infrastructure business areas such as energy, transport, logistics, and related ventures. This shift indicates a departure from the conglomerate’s previous strategy of venturing into consumer-centric industries, including the acquisition of Indian broadcaster NDTV and the food oil business of Adani Wilmar.

1. Implications of the Deal:

• The transaction, set to be finalized by the end of March, aims to dispel any existing concerns regarding the group’s liquidity status. By selling 13 per cent of Adani Wilmar to the public and relinquishing the remaining 31 per cent stake to Wilmar, Adani Group anticipates shedding the “liquidity perception overhang”.
• Wilmar’s decision to acquire the majority stake in Adani Wilmar underscores the latter’s position as India’s leading food oil company with a robust distribution network encompassing urban and rural areas. Additionally, Adani Wilmar’s export reach spans over 30 countries, further solidifying its global presence in the food industry.

1. Market Performance and Response:

• Adani Wilmar faced a 12 per cent decline in total operating income during the previous financial year due to various factors such as plummeting food oil prices and losses incurred by its Bangladesh subsidiary. However, recent quarterly earnings reflect a positive upswing in the company’s performance with signs of recovery.
• Despite the rebound in financial metrics, Adani Wilmar’s stock witnessed a 12 per cent dip earlier this year, juxtaposed against the 8.8 per cent gain in India’s Nifty 50 index. This divergence in market performance underscores the challenges faced by Indian food companies amidst economic uncertainties and consumer spending constraints.

In conclusion, the strategic divestment by Adani Group signifies a pivotal restructuring of its business portfolio to prioritize core infrastructure segments. The move not only addresses immediate financial pressures but also positions the conglomerate for sustained growth and resilience in the evolving economic landscape. By repositioning its focus on key areas of strength, Adani Group aims to navigate challenges effectively and capitalize on emerging opportunities in the global marketplace.