India’s Adani to slow down on dealmaking to focus on existing projects

MUMBAI: India’s ports-to-power giant Adani Group will go slower on acquisitions this year as cost of capital has risen globally, the company said, signaling reduced dealmaking at the conglomerate which has rapidly grown by acquiring assets.

Adani’s listed shares in India have clawed back some $50 billion in its market capital after a rout triggered by U.S. short-seller Hindenburg’s report alleging improper use of tax havens and flagging concerns over its debt levels. Adani called the report baseless, and has since garnered investor support and repaid debt.

Merger and acquisition activity has slowed globally amid a collapse in debt financing markets and stock market volatility. Global central banks have raised rates and forced many companies to abandon proposed acquisitions.

Led by billionaire Gautam Adani, the group rapidly expanded in recent years, with growth also fueled by as many as 30 acquisitions it did across key sectors. This included a $10.5 billion deal to buy cement assets from Swiss giant Holcim and the takeover of Indian TV network NDTV.

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While the group will continue to review acquisition opportunities, the Adani spokesperson said high debt costs will weigh.

“The cost of debt and capital has gone up … This is the first time this is happening in the last five to six years. So this year you will generally see less activity on the M&A side,” he said.

Last week, the group’s flagship company Adani Enterprises canceled a proposed acquisition of Macquarie Group’s two road assets worth $375 million. Earlier this week, Adani said that it has completed a $2.65 billion debt cutting programme.

Adani Group plans to focus on existing projects for the next nine months, and ensure funds raised are used for that purpose, the spokesperson said, without giving details.

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After the Hindenburg report forced Adani to shelve its mega share sale in February, Adani recently announced plans to raise $2.57 billion, but the spokesperson declined to comment on any timing or potential talks with investors.

The company has been meeting investors to share its plans for the business and to raise funds, telling them that banks lent $2.3 billion to the group in recent months despite a turbulent market for its shares, the spokesperson said.

The cement sector will be in focus, which the company said, adding that there are plans to explore multiple Greenfield opportunities.

After the Hindenburg report, the group’s shares have recovered but still down more than $100 billion in market value from the end of January. In a relief for Adani, the market regulator who is investigating the Hindenburg allegations has so far “drawn a blank”, a Supreme Court appointed panel said in May.