India: Adani Gas seeks $350m from promoter group firms

Gaurav Gupta, CEO of Adani Finserve, the parent of Adani Capital, said that we were very impressed with PRA’s execution in the Pune market. Photo: Mint

City gas distributor Adani Gas Ltd has sought a perpetual loan of $350 million from its promoters to finance expansion, two people aware of the matter said.

The Adani group company has approached three promoter group entities—Adani Rail Infra Pvt. Ltd, Adani Infra India Ltd, and Adani Properties Pvt. Ltd—for the loan, the people said on condition of anonymity. Adani Gas will pay an interest of 9% for the loan, and spend about $50 million of the $350 million for retail distribution.

An Adani Gas spokesperson did not respond to an email sent on 9 January.

“The company is availing of an unsecured perpetual loan of around $350 million from Adani Properties, Adani Rail Infra and Adani Infra India to meet its expansion plans,” said a banker, the first of the two people cited above.

Adani Gas is developing city gas distribution (CGD) networks to supply piped natural gas (PNG) to industrial, commercial and domestic users, and compressed natural gas (CNG) to the transport sector.

CGD refers to transportation or distribution of natural gas to consumers in domestic, commercial and transport sectors through a network of pipelines. Over the past decade, the business has attracted several companies to lay networks of gas pipelines.

“This is a material related party transaction and the perpetual loan requires the prior approval of the public shareholders by way of an ordinary resolution as the votes of the promoters of the company will not be considered for the purpose of the resolution,” said a company executive, the second person cited above. The company has already set up city gas distribution networks in Ahmedabad and Vadodara in Gujarat, Faridabad in Haryana and Khurja in Uttar Pradesh. Adani Gas, in association with Indian Oil Corp. Ltd, is also developing distribution networks in Allahabad, Chandigarh, Ernakulam, Panipat, Daman, Dharwad, and Udhamsingh Nagar.

The Adani family, which owns a 74.8% stake in Adani Gas, has agreed to sell a 37.4% stake in the company to French energy company Total SA. Last October, Total agreed to acquire the stake for around 5,700 crore. This is Total’s biggest investment in India’s clean energy segment. The proposed acquisition marks the largest foreign direct investment in India’s city gas distribution industry, with the deal giving Total joint control of Adani Gas, along with the Adani group.

City gas distribution is turning out to be the next big downstream expansion in India, after fuel retailing, with the government expecting investments of as much as 1.2 trillion over the next decade.

Total, the world’s second-largest liquefied natural gas company, will buy the stake in Adani Gas through a combination of a tender offer to public shareholders and from the Adani family, Total and Adani Gas had announced in October.

Total plans to acquire as much as 25.2% from the public and the rest from the Adani family.

Eventually, the Adani family and Total will hold a 37.4% stake each and public shareholders will hold the remaining 25.2%. Publicly traded companies in India have to maintain a minimum public shareholding of 25%.

This article was first published on livemint.com.

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.