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Gautam Adani’s conglomerate will divest its 44 per cent stake in a joint venture food business with Singapore’s Wilmar International to focus on its core infrastructure arm, weeks after the US indicted the Indian billionaire and company executives over an alleged multimillion-dollar bribery scheme.
Adani Wilmar, a 25-year-old joint venture between Adani Group’s companies and Lence, a Wilmar International subsidiary, has a $5bn market valuation.
The roughly $2bn raised through the sale will ease funding pressures faced by the Indian conglomerate since the US charges, according to a person familiar with the matter.
It comes after Adani Group this month pulled out of a more than $500mn loan agreement with the US International Development Finance Corporation for a strategic ports project in Sri Lanka.
The group said it would use the fresh capital to “turbocharge” growth of its core business in energy, transport and logistics, along with adjacent businesses.
The move marks a shift from plans by the conglomerate, run by India’s second-richest tycoon, to diversify deeper into a range of consumer-facing industries.
Before the US charges, Adani Group had sought to expand and integrate far-ranging arms of its business empire including NDTV, the Indian broadcaster it acquired in 2022, and Adani Wilmar, which sells food oils and staples such as rice and wheat.
“We’ve been hearing for a while that consumer goods were not super core for [Adani’s] business . . . it was really Wilmar that was driving the thought process on how to go about it,” said one Mumbai-based banker.
“It’s core for Wilmar,” they added. “If there was any overhang of the Adani name on the valuation this will go away in a matter of time.”
The transaction, expected to be completed by the end of March, will help shed the group’s “liquidity perception overhang”, the person said.
Under the deal approved by Adani’s board on Monday the group will sell 13 per cent of Adani Wilmar publicly, with Wilmar buying the Indian group’s remaining 31 per cent stake.
Explaining its rationale for the deal, Wilmar said in a statement that Adani Wilmar was India’s largest food oil company with 100 per cent urban coverage and a presence in more than 30,000 rural towns. It also exports to more than 30 countries.
The divestment comes as Indian food companies have struggled with weak demand among hundreds of millions of poor and middle-class households, who have been hit by heightened inflation and scaled back their spending.
Adani Wilmar’s total operating income fell 12 per cent in the last financial year to about $6bn after it was hit by declining food oil prices and losses at its Bangladesh subsidiary, although its latest quarterly earnings have since shown a recovery, according to Indian credit rating agency Care Ratings.
But the company’s stock has also fallen 12 per cent this year, compared with the 8.8 per cent gain of India’s blue-chip Nifty 50 index.
Neither Adani nor Wilmar referenced the US charges in their statements on the decision.
The Adani Group has denied any wrongdoing in response to the US allegations, while Gautam Adani said “every attack makes us stronger” after the indictment.
Adani Group’s international ventures have come under increased scrutiny since the US indictment, with Kenya’s President William Ruto cancelling $2.6bn in proposed deals and Bangladesh probing a cross-border electricity deal.
