Gautam Adani zooms ahead in Bloomberg Billionaires Index

Since 2014, Adani Group has become India’s largest private ports operator and coal power producer

For over a decade, Ahmedabad-based businessman Gautam Adani lived in the shadow of fellow Gujarati entrepreneur Mukesh Ambani whose Reliance Industries raced ahead to become the largest private company in the country, propelling Ambani to the select list of one of the richest persons in the world.

Even as the Adani Group began creeping ahead on the list of top Indian businesses, Adani seemed to be happy to stay off the spotlight. It is only in the past few years, notably since Narendra Modi became Prime Minister in 2014, that Adani and his businesses began grabbing headlines in India and overseas. In fact, in May 2014, Modi flew from Ahmedabad to New Delhi in Adani’s private jet, indicating the close ties that the two enjoy.

Proximity to power pays

Though Adani Group had been growing at a fast clip even before Modi took charge in New Delhi, the growth in the past seven years has been astounding as he raced ahead in various domains, almost all of them in sectors known as rent-seeking where the governments have a complete control over the entry of players.

Since 2014, Adani Group has become India’s largest private ports operator and coal power producer. Adani group has a significant share in the power transmission as well as gas distribution market as well. Incidentally, in the gas distribution, Adani bagged the largest number of contracts handed over by the government in a large-scale auction of 126 cities in 2018, giving Adani Group a total of 25 projects.

Similarly, during the privatisation of airports in India in 2019 the Ministry of Civil Aviation, in a very controversial move, awarded all six airports to Adani Group, even though it had no experience in the domain. Incidentally, just before the tenders were called, the ministry changed the rules to remove the requirement of previous experience in the sector as a qualification for bidding. In one go, Adani Group became the largest private operator of airports in India and could soon oust government-owned Airports Authority of India from the top position in the country.

This led to accusations of the crony capitalism and the Modi government helping its ‘friends’. Similarly, Adani Group is believed to be one of the biggest, perhaps even the biggest gainer, from the last year’s highly controversial farm laws that totally deregulate the agriculture sector and remove any checks and balances on market domination and power concentration.

The company says it aligns its business with the government priorities and today has interests in a wide range of sectors like coal mining and trading, ports, shipping, rail, logistics, renewable and thermal power generation, transmission and distribution, food products, cold storage, grain silos public transport, defence and consumer finance. Incidentally, in all of these sectors, government plays a crucial role and competition, if any, is very limited.

Billionaires’ race

With the stock markets in India and overseas rising to new highs, valuations of the Adani group companies have also flared up dramatically. Shares of all Adani group stocks, except one, have rallied at least 50 pc this year, propelling Gautam Adani to the top of the billionaires list in terms of wealth gained since January 1, 2021. According to Bloomberg, his net worth rose USD 16.2 billion in 2021 to USD 50 billion. The surge in wealth dwarfs the USD 8.1 billion added by Ambani, who remains Asia’s richest person.

Adani Green Energy and Adani Ports account for more than half (USD 27 billion) of his total wealth, Bloomberg data showed. Adani Total Gas has jumped 96 pc this year while the flagship Adani Enterprises has advanced 90 pc. Adani Transmission is up 79 pc. Adani Power and Adani Ports and Special Economic Zones have gained more than 52 pc this year. Adani Green Energy after rising over 500 pc last year, is up 12 pc so far.

Even as Adani Group continues to struggle with the Carmichael coal mine in Australia where his project has run into severe opposition from locals, in India Adani has expanded into coal mining at a fast clip. He recently bid for 12 of the 19 coal mines that went under the hammer in their first commercial auction in India.

Incidentally, the Adani Group entered the renewable energy business very late in the day. Adani Green Energy started in 2015 with the world’s largest single location solar power project in Kamuthi, Tamil Nadu with 648 MW installed capacity. Since then, it has come a long way to be the world’s largest solar power producer and today it has over 14.6 GW of contracted renewable capacity, with an operating capacity of 3 GW and another 3 GW under construction and 8.6 GW under development. The company aims to achieve 25 GW of renewable power generation by 2025.

One of key motors behind Adani racing ahead in renewable power and other energy sectors is its partnership with Total, French oil giant. The contours of this crucial relationship were formed during Modi’s first visit to France in 2015 and a return visit by Emmanuel Macron in 2017. On both the occasions, Gautam Adani was a prominent member of the Indian business community present on site.

In 2018, Total and Adani began partnership with an investment by Total in Adani Gas Limited, city gas distribution business, associated LNG terminal business and gas marketing business. Over the years, the two companies decided to expand it to renewable energy and Total and Adani agreed the acquisition of a 50 pc stake in a 2.35 GW portfolio of operating solar assets owned by AGEL and a 20 pc stake in AGEL for a global investment of USD 2.5 billion by Total, which will also have a seat on the company’s board.

Over the years the group’s debts have soared, reaching about USD 30 billion, but Adani has had ready access to bank credit, even in moments of serious credit crunch industrywide. Moreover, large-scale investments by international investors, such as Total and Warburg Pincus, have helped Adani avoid any defaults.

As the economy recovers from the pandemic and the group continues to benefit from its proximity to power, the best days for Adani may yet lie ahead.