Adani Group Firms’ Stocks Dip as Abu Dhabi’s International Holding Company Plans Stake Sale

Introduction:

In a recent development, shares of two prominent Adani Group firms witnessed a decline of over 2 percent on Friday, September 29th. The cause behind this market movement was the announcement made by the Abu Dhabi-based conglomerate, International Holding Company (IHC), on Thursday. IHC revealed its intention to divest its stake in Adani Green Energy and Adani Energy Solutions, formerly known as Adani Transmission. This strategic decision by IHC is part of its broader portfolio rebalancing strategy.

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The Stake Sale:

On Thursday, IHC disclosed that its two subsidiaries, Green Energy Investment Holding and Green Transmission Investment Holding, have entered into an agreement with an undisclosed buyer to sell their investments in Adani Green Energy and Adani Energy Solutions. However, the identity of the buyer has not been revealed as of now.

Green Energy Investment Holding currently holds a 1.3 percent stake in Adani Green Energy, valued at Rs 2,019 crore based on the closing price of Rs 1,012 on the Bombay Stock Exchange (BSE). On the other hand, Green Transmission Investment Holding possesses a 1.4 percent stake in Adani Energy, with a value of Rs 1,305 crore based on the closing price of Rs 830 on BSE.

It is worth noting that in April 2022, IHC had made substantial investments of Rs 3,850 crore in both Adani Green Energy and Adani Transmission. Consequently, this move signifies that the Abu Dhabi-based company will be selling its stake at a loss.

Previous Investments:

Furthermore, it’s crucial to highlight that IHC had also invested Rs 7,700 crore in the flagship firm, Adani Enterprises, acquiring a 3.5 percent stake. This investment was part of IHC’s strategy to explore strategic opportunities within the renewable energy sector across India, the Middle East, and African regions.

In January of the same year, IHC had invested $400 million in Adani Enterprises’ follow-on-public (FPO) offering, which, eventually, was called off.

Recent Developments:

Adding to the complexity of this situation, last week, Adani Green Energy, which boasts France’s TotalEnergies as a major shareholder with a 19.75 percent equity stake, announced the separation of certain renewable assets to its wholly-owned subsidiary, Adani Green Energy 23. TotalEnergies will inject $300 million into Adani Green Energy for a 50 percent stake in Adani 23, a subsidiary set to acquire 10 gigawatts of renewable energy from its parent company.

Conclusion:

The decision by International Holding Company (IHC) to sell its stake in Adani Group firms has created ripples in the stock market. It reflects IHC’s strategic approach to rebalancing its overall portfolio. The impact of this stake sale, especially given the initial investment made by IHC, is a topic of keen interest in the financial world. As we await further details about the buyer and the implications of this transaction, the Adani Group’s future moves in the renewable energy sector will certainly be worth watching.

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