The Adani Group, now the country’s biggest conglomerate by market capitalisation, Friday completed the acquisition of and its listed subsidiary and committed more funds through a record preferential allotment of stock, demonstrating the intent to cement the group’s leadership credentials in India’s building-materials industry by 2030.
The Adanis, which overhauled the boards of the two listed entities to reflect the biggest takeover in India’s infrastructure sector, would infuse Rs 20,000 crore into Ambuja Cements through a preferential allotment of shares. The funds seek to “further strengthen” Ambuja’s balance sheet, and meet the capital requirements for capacity enhancement, further acquisitions and investments in technology.
The shares will be issued to Harmonia Trade and Investment, which is listed as a promoter entity of
This preferential allotment trumps the ₹16,824-crore issuance by
in 2008 in favour of its promoters. The investment reveals “Adani’s commitment” to the cement business and an endeavour for the “complete transformation” of the cement sector, a source close to the Adanis told ET.
“What makes cement an exciting business is the headroom for growth in India, which exceeds that of every other country well beyond 2050,” Adani Group chairman Gautam Adani said in a statement, explaining the bulge-bracket investment by the conglomerate. The preferential shares of Ambuja Cements would be issued at a price of ₹418.87, a premium of almost 9% over ₹385 that the company offered per share during the open offer.
The stock ended at ₹516.3 on the BSE on Friday, 4.19% lower than the previous close. It has gained over 40% since the deal between the Adani Group and Holcim was announced.
“Cement is a game of economics dependent on energy costs, logistics and distribution costs, and the ability to leverage a digital platform to transform production as well as gain significant supply chain efficiencies,” Adani said. Each of these capabilities was a core business for the Adani Group, giving it “unmatched” adjacencies, he said. The board overhauls conclude a speedy takeover of the Indian cement business of Switzerland’s Holcim Group by the Adani Group. The deal was announced four months ago, on May 15.
Gautam Adani, meanwhile, raced to another major milestone in wealth creation Friday when he become the second wealthiest individual on the planet for a brief period, according to Forbes.
The two companies together own the second largest cement capacity in the Indian market – only behind Aditya Birla Group’s
. The acquisition was made by the Adani Family through Endeavour Trade and Investment Ltd, a special purpose vehicle.
These advantages will make Adanis more competitive in the cement business and “put us on track to become the largest and most efficient manufacturer of cement by no later than 2030”, Adani said.
The reconstituted board of Ambuja Cement will be chaired by Gautam Adani. His son Karan Adani will chair the board of ACC. NS Sekhsaria, the industrialist who founded Ambuja Cement and remained as its non-executive chairman after the sale of the company to Holcim, has been now designated as chairman emeritus.
Adani brought back former Ambuja Cement CEO and managing director Ajay Kapur to lead the company in the same role, taking over from Neeraj Akhoury. Meanwhile, Sridhar Balakrishnan will continue to lead ACC but with a changed designation of whole-time director and CEO (from managing director and CEO.) Vinod Bahety has taken over as the chief financial officer of both companies.
Most of the Holcim-appointed board members of the two companies tendered their resignations on Friday, making way for Adani-appointed boards. Former
Chairman Rajnish Kumar joined the Ambuja Cement board as an independent director.
Notably, Adanis have also changed the financial year cycle of the two cement makers from January-December to April-March.
In all, Adani paid $6.5 billion to acquire the two cement companies. About $6.4 billion were paid to Holcim for its entire 63.11% stake in Ambuja Cement and 4.48% direct stake in ACC. Ambuja owns a 50.05% interest in ACC. If the preferential allotment goes through, the Adani stake will inch further to reach close to 70%, a level the Ahmedabad-based business group is known to hold in most listed group companies. With Ambuja and ACC in its fold, the group will now have nine listed companies on the bourses. The rest of the sum is to be paid for shares surrendered during an open offer.