Adani Group intends to take time making acquisitions due to rising cost of capital worldwide. The group plans to focus on ongoing projects and raise $2.57 billion, with the cement industry as a main focus.
The Adani Group intends to take its time making acquisitions this year due to the rising cost of finance internationally. The announcement indicates less dealmaking at the conglomerate that has developed quickly through purchasing assets.
After a collapse caused by a report by American short-seller Hindenburg claiming unlawful use of tax havens and raising worries over its debt levels, Adani’s listed shares in India have recovered around $50 billion in market value. Adani referred to the story as false, and since then, it has gained the support of investors and paid off debt.
Global merger and acquisition activity has decreased as a result of the collapse of the debt financing markets and the volatility of the stock market. Rates have increased, forcing several businesses to cancel their anticipated purchases.
The business, which is headed by billionaire Gautam Adani, has experienced remarkable development in recent years. This expansion was aided by as many as 30 acquisitions it made in important industries. This includes the acquisition of Indian TV network NDTV and a $10.5 billion deal to purchase cement assets from Swiss conglomerate Holcim.
High loan expenses will weigh, according to the Adani spokeswoman, even though the firm will continue to evaluate acquisition options.
“The cost of capital and debt has increased… In the last five to six years, this hasn’t happened before. Therefore, this year would usually witness less activity on the M&A front, he said.
Adani Enterprises (ADEL.NS), the group’s main firm, reneged on a $375 million deal to buy two road assets from Macquarie Group (MQG.AX), last week. Adani said earlier this week that it has finished a $2.65 billion debt-reduction program.
The spokesman added without going into specifics that Adani Group intends to concentrate on ongoing projects for the ensuing nine months and make sure monies received are utilised for that purpose.
Adani recently announced intentions to raise $2.57 billion, but the spokeswoman declined to comment on any timeframe or prospective investor conversations after the Hindenburg report pushed Adani to postpone its big share sale in February.
The company has been meeting with investors to discuss its ambitions for the company and to seek money, the spokeswoman said. The company has informed the investors that banks recently gave the group $2.3 billion despite a volatile market for its shares.
According to the corporation, the cement industry will be a main emphasis, and there are plans to investigate several greenfield potential.
The group’s shares have rebounded since the release of the Hindenburg study, but their market value is still down by more than $100 billion from the end of January. A Supreme Court-appointed panel stated in May that the market regulator looking into the Hindenburg claims has so far “drawn a blank,” which is good news for Adani.
