Adani Group to raise up to $500 mn from Europian funds in energy push

Billionaire Gautam Adani’s family members and associates hold 53.67% in Adani Green Energy, the group’s second-largest subsidiary with a market value of over ₹2.8 trillion. The company will need to sell new shares worth about 1.5% stake to raise the amount, going by its current market price.

“The group is negotiating with at least two large funds based out of Europe. One is an energy-sector fund and one is a large hedge fund. Funds are keen to invest in the company after it emerged as the fastest and the largest renewables firm in India with about 11 GW operational capacity. The deal to raise the capital via stake sale in Adani Green is likely to be announced in May,” one of the two people cited above said on condition of anonymity.

The company has so far raised around $3 billion, mostly from the promoters or from consortium lenders. If the latest deal goes through, it will be the first time Adani Green will raise a large amount of capital from global funds.

An email sent to Adani Group on Friday seeking comments remained unanswered till press time.

Adani Green will use the amount primarily to build new solar, wind and hybrid power projects in Rajasthan, Gujarat and other locations. According to the people cited above, the funds will help Adani Green expedite capacity expansion from 10,963 MW to over 20,000 MW. Currently, it has a hybrid (solar plus wind energy) power generation capacity of 2,140 MW (in Rajasthan) and a total wind energy power generation capacity of 1,401 MW, while the rest is solar.

Recently, the Adani family invested over Rs. 9,350 crore equity in Adani Green by subscribing to its warrants, increasing its promoter holding.

“In the coming months, further financing of AGEL projects will be done via a mix of debt, equity and internal accruals. The company has closed a funding for a construction facility worth over $3 billion via a mix of debt and equity over the past year, over and above the promoter equity infusion,” the second person added.

Adani Green’s JV with France’s Total Energies is building a 1,050 MW project, in which Total will contribute funding for 300 MW.

Adani Green has a target to achieve 45 GW of renewable energy generation capacity by 2030 and currently, it has a locked-in growth capacity of 20,844 MW from the existing projects, shows the latest company presentation.

The company claims to command the highest margin among peers, the highest line availability and India’s first and the World’s largest solar-wind hybrid cluster. A total of 3990 MW of Adani Green’s renewable capacity is operational in Rajasthan and an additional 2550 MW is under execution. In Gujarat, about 3,315 MW is operational and another 7,469 MW in capacity is under execution.

The people cited above said global investors are encouraged by Adani Green’s growth in FY24, when it increased operational capacity by 35%, with a greenfield addition of 2,418 MW solar and 430 MW wind power plants. This includes operationalization of 2,000 MW as part of ongoing development of the world’s largest 30,000 MW renewable energy project in Khavda, Gujarat.

The company said that during FY24, its overall energy sales rose 47% to 21,806 million units and in the hybrid portfolio, it has risen by 194% on the back of increase in effective operating capacity.

India is aspiring to nearly triple its green energy capacity to 500 GW by the end of this decade. In the green energy race, Adani is competing with Asia’s richest man Mukesh Ambani-led Reliance Industries Ltd. and India’s largest conglomerate Tata Group.

Tata Power Co. has aimed a near fourfold growth in its renewable generation capacity to 15 gigawatts by 2027, according to a 10 January report by Bloomberg. It has reached an exploratory agreement in January with the government of Tamil Nadu to invest $8.5 billion in clean energy projects.

The firm, according to the report, has signed a preliminary deal with the southern Indian state to build 10 gigawatts of renewable energy projects and expand an existing plan for solar panel manufacturing to 4.3 gigawatts of capacity.

Green power currently accounts for 38% of Tata Power’s generation capacity and the company intends to increase it to over 70% by 2030.

By 2045, Tata Power aims to produce all its energy from renewable sources.

On the other hand, Ambani’s RIL will commission a new energy giga complex in Gujarat in the second half of 2024. Reliance is building a giga complex with a 100 GW capacity spread over 5,000 acres in Jamnagar in Gujarat. The complex comprises five giga factories for photovoltaic panels, fuel cell system, green hydrogen, energy storage and power electronics.

Amid the increasing push for sustainable global practices Ambani has said RIL is committed to double its investment target for green energy to Rs. 1.5 trillion.

In 2021, RIL announced an investment of Rs. 75,000 crore to build its new energy business.

Last week, as per a report by The Economic Times, RIL and construction giant Larsen and Toubro (L&T) along with energy companies Greenko Group and Welspun New Energy will be setting up green hydrogen and green ammonia units at Gujarat’s Deendayal Port Authority (DPA) in Kandla. The project could see a cumulative investment of up to Rs. 1 trillion.