Indian ports-to-energy conglomerate Adani Group continues to seek strategic equity partners in line with its long-term investment strategy, debt research firm CreditSights said in a report, hinting at concerns over the group’s increased leverage. The group, led by Asia’s richest man Gautam Adani, is looking to expand its presence in power generation and infrastructure, and ventured into cement earlier this year.
Adani’s chairman said in late September that the group would invest more than $100 billion over the next decade, much of it in the energy transition business. CreditSights said the conglomerate is venturing into new or unrelated businesses that are highly capital intensive.
It has plans for four business verticals including energy and utilities, transportation and logistics, materials, metals and mining and consumer, CreditSights said. “We continue to hold the view that several of the group’s companies maintain increased leverage due to aggressive expansion plans, which are largely debt-financed and under pressure from their credit metrics and cash flow,” said a Nov. 4 note that was shared.
The research firm, part of Fitch Group, said it remained “concerned” about the group’s leverage.”We expect its expansion and acquisition appetite to remain robust, and that rising debt from expansion will outpace further EBITDA generation, which could lead to further deterioration of the credit profile,” CreditSights said. The combined market capitalization of publicly traded companies is $260 billion and has been growing exponentially in recent years. CreditSights added that the group continues to seek strategic capital partners that align with its long-term investment strategy, such as sovereign wealth funds, and also maintains strong relationships with existing partners.
