MUMBAI: Adani Group has decided to increase the size of its offer for sale (OFS) to offload part of its stake in Adani Wilmar to 20 per cent from 13 per cent announced earlier, due to strong demand from institutional investors. The change in contours of the deal was triggered by strong institutional interest for the company’s shares, sources said.
Higher OFS size also helps the Adani group to get some part of the money faster, as the original deal (stake-sale to Wilmar) could be implemented over one year. This also helps Wilmar as it would need to bring in less money on the table soon, sources said. As a result, after the completion of the whole deal that would see Adani exiting Adani Wilmar, the holding of Wilmar, the Singapore-based FMCG major, would be 68 per cent , sources said.
On Thursday, Adani Commodities, one of the promoters of Adani Wilmar that holds 44 per cent stake, told the exchanges that it will sell 20 per cent of its holding in the company through the OFS route. The stake sale is estimated to bring in at least Rs 7,150 crore for the Ahmedabad-based conglomerate. The minimum per-share price in the offer is Rs 275, a 15 per cent discount to Adani Wilmar’s closing price on BSE on Thursday.
The deal is part of the 44 per cent that the Adani Group plans to offload for about $2 billion to completely exit the FMCG business. The sale proceeds will free up funds for the group to invest in its core business of building infrastructure. On Nov 21 last year two US govt agencies had indicted Adani group chairman Gautam Adani and some other top executives for their attempt to bribe Indian government officials and hiding it from US investors while selling bonds issued by group companies. The group had denied all the allegations in the indictment orders by two US govt arms. However, post the indictments, fundraising for the group has become an uphill task.
The base offer for Adani Wilmar that owns the Fortune sunflower oil and Kohinoor basmati rice brands, is for about 17.5 crore shares (13.5 per cent of the company), with the option to offload an additional 8.4 crore shares (6.5 per cent ). The offer will open on Jan 10 and close on Jan 13.
After Wilmar consolidates its stake in Adani Wilmar, the Singaporean company will implement a business approach comparable to ITC’s, utilising the Indian arm’s primary edible oil operations and widespread distribution channels to boost its other FMCG products’ growth. ITC had leveraged its cigarette business to expand into new FMCG categories. Post the completion of the deal, the company will be renamed AWL, AWL Agri Business, or Fortune Agri Business.
Adani Wilmar’s FMCG portfolio had recorded a 24 per cent volume growth year-on-year in the December quarter of this fiscal. Its edible oil business, predominantly under the ‘Fortune’ brand, has a distribution network reaching 2.1 million outlets. Despite its declining share, the edible oil business still accounts for a lion’s share of 80 per cent of the company’s revenues.
In India, the Wilmar Group also has a 62.5 per cent stake in Shree Renuka Sugars, a leading sugar producer in the country. Five brokers__Antique Stock Broking, ICICI Securities, Jefferies India, Nuvama Wealth Management and SBICAP Securities__are managing the offer, term sheet for the OFS showed.
