- The Group issues clarification of inaccurate media reporting by Financial Times
NE BUSINESS BUREAU
AHMEDABAD, APR 10
Adani Group on Monday listed out details of the USD 2.87 billion stake sales in group firms since 2019 and how USD 2.55 billion of this was ploughed back into business, as it looked to counter Congress leader Rahul Gandhi’s claim of Rs 20,000 crore coming in to the conglomerate through ‘shell companies’.
While investors such as Abu Dhabi-based global strategic investment company, International Holding Company PJSC (IHC) invested USD 2.593 billion in group firms such as Adani Enterprise Ltd and Adani Green Energy Ltd (AGEL), promoters sold stake in Adani Total Gas Ltd and AGEL to raise USD 2.783 billion.
“These funds were reinvested by promoter entities to support the growth of new business and in portfolio companies such as Adani Enterprises Ltd, Adani Ports and Special Economic Zone Ltd, Adani Transmission Ltd and Adani Power Ltd,” the group said.
The statement was issued rebutting reports in an international publication, ‘Financial Times’ which apparently was the basis of Gandhi’s statement late last month questioning how “Rs 20,000 crore suddenly arrived in Adani’s shell companies.”
“We understand the competitive race to tear down Adani can be alluring. But we are fully compliant with securities laws and are not obscuring promoter ownership and financing,” it said.
Adani said promoters in January 2021 raised USD 2 billion through the sale of 20 percent stake in renewable energy firm, AGEL to French giant TotalEnergies. Prior to that, they had sold a 37.4 percent stake in city gas arm, Adani Total Gas Ltd to the same French firm for USD 783 million.
Adani said the funds came from sale of stake in Adani Total Gas. Also, they weren’t obscure entities because they are promoter held.
TotalEnergies bought overseas investment vehicles of the promoters to make some of those investments.
And the funds so received overseas were ploughed back into group entities, which is now being termed by some as investment by ‘shell companies’.
“These funds were reinvested by promoter entities to support the growth of new business,” the statement said.
“The promoter entities have had substantial holdings in Adani companies, which have increased over time. It is through the timely use of funds received through the sale of equity that these entities have been able to increase their investments.”
All the transactions were publicly disclosed in stock exchange filings, it said.
Also, “the Adani family deployed its returns from the secondary sale to make additional purchases of AGEL equity and to provide support to AGEL via a shareholder loan and other securities – all also in the public domain,” it said.
The rapid, debt-fuelled growth of Adani group was in January called in to questioning by a US short-seller Hindenburg Research which alleged that accounting fraud and use of a labyrinthine network of mostly Mauritius-based shell companies to route funds into India to manipulate share prices of the group’s seven listed companies or make their balance sheets look healthier.
While Adani group had denied all, which strenuously denied Hindenburg’s allegations, opposition parties and their leaders including Gandhi have been quick to seize on the allegations to target Prime Minister Narendra Modi and demand inquiries into Adani’s foreign connections.
Adani said it had publicly disclosed all details and reportage on the investment of funds into group companies that had incorrectly mixed primary and secondary investment.
“The facts are easily available and transparent. They are available through relevant securities regulatory filings that were made at the time and are a matter of public record,” it said, adding the “misleading narrative” has become a “regrettable” political issue.
Adani Group issues clarification of inaccurate media reporting by Financial Times
Adani Group on Monday shared a letter sent to the Financial Times following its publication of an article that contained fundamental misunderstandings of prior Adani Group disclosures, and resultant inaccuracies in the story.
The full text of the Letter to the Editor follows:
To the Editor
Your article of 22 March 2023 “Indian Data Reveals Adani empire’s reliance on offshore funding” is, on the face of it, a mendacious, deliberate effort to attempt to paint the Adani family and the Adani Group in the worst possible light. In doing so, it reveals a willingness to be selective in using publicly available facts, lazy in its approach to understanding disclosures to which your reporters were directed, and makes insinuations that are false and damaging.
Our statement to your reporter, that all the transactions about which the Financial Times inquired have been publicly disclosed, is accurate, and the story amply demonstrates that your reporters conveniently chose not to look in a meaningful way at those public disclosures or even at the related press releases (including ones that the Financial Times covered at the time).
If your reporters had fully taken into account all of those filings and other disclosures, they would have been simply unable to include – with any honesty – their subjective epithets about “hard-to-scrutinise money flows”, “opaque overseas investments” and “funds of unclear provenance.”
In fact, as publicly disclosed on 18 Jan 2021 and 23 Jan 2021, the Adani Group’s promoters raised USD 2 Bn through the sale of a 20% stake in Adani Green Energy Ltd (AGEL) to TotalEnergies of France (then Total Renewables SAS), a fact the Financial Times contemporaneously reported but chose to ignore completely in the 22 March 2023 story.
Further, in Oct 2019, the promoters had raised USD ~700 Mn through the sale of a 37.4% stake in Adani Total Gas Ltd, a fact published in an Adani press release. Again, the Financial Times chose to ignore this fact in its report, although it did publish the news at that time.
These funds were reinvested by promoter entities to support the growth of new business and in portfolio companies such as Adani Enterprises Ltd, Adani Ports and Special Economic Zone Ltd, Adani Transmission Ltd and Adani Power Ltd. The promoter entities have had substantial holdings in Adani companies, which have increased over time. It is through the timely use of funds received through the sale of equity that these entities have been able to increase their investments.
Of note, the Adani family deployed its returns from the secondary sale to make additional purchases of AGEL equity and to provide support to AGEL via a shareholder loan and other securities – all also in the public domain.
Your story incorrectly mixed primary and secondary investments, and also ignored entirely a secondary transaction of USD 2 Billion – all so that the reporters could conveniently create an illusion of a USD 2 billion “gap in funding” to support their pre-conceived thesis of supposed round-tripping. That all falls away once the AGEL equity proceeds are taken into account.
Further, the article has no qualms about contradicting itself in order to create innuendoes. For example, the story claims:
“Most offshore shell companies supplying FDI to the conglomerate have been disclosed as part of Adani’s “promoter group”, meaning they are closely tied to Adani or his immediate family.”
Yet soon after, the story reports:
“Analysts said the money moving from obscure Mauritius entities was concerning because it was impossible to ascertain whether or not the funds had been “round-tripped”
If the ‘Financial Times’ agrees in the first paragraph above that the companies are part of the promoter group, then definitionally, how can they be validly described as obscure entities?
The facts are easily available and transparent. They are available through relevant securities regulatory filings that were made at the time and are a matter of public record.
We understand the competitive race to tear down Adani can be alluring. But we are fully compliant with securities laws and are not obscuring promoter ownership and financing. Through the creation of a misleading narrative, your story has created reputational impact on Adani Group companies. We ask you to take down the story immediately from your website. Further, because this story has driven misunderstanding in the market and with other media, and has become a political issue, we are compelled to share this information publicly at this time. That is regrettable, but could have been avoided by your reporters taking a careful and objective approach.
Adani Group
