Adani Wilmar Limited shares down 7%
Shares of Adani Wilmar experienced a significant drop of nearly 7% in early trading on December 31st, following the announcement by Adani Enterprises of their plan to exit the joint venture with Singapore’s Wilmar International. Adani Enterprises will be selling its entire 44% stake in the company as part of a $2 billion deal. The price at which the Adani Group is selling its stake, at up to Rs 305, represents a 7% discount to the closing price on Monday.
In a recent note, Investec has assigned a Hold rating on Adani Wilmar with a target price of Rs 397 per share. They believe that the single ownership will lead to strategic simplification, which is a positive development for the company. Despite this, Adani Wilmar shares have seen a 17% decrease so far in 2024. JPMorgan’s note has given an Underweight rating with a target of Rs 320 per share, highlighting the company’s significant sourcing, supply chain, and scale advantages.
Shares of Adani Enterprises also saw a decline of over 2% in trading at 10:15 am. The company officially announced that its wholly-owned subsidiary, Adani Commodities LLP, and Lence, a subsidiary of Wilmar International, have signed the agreement for the transaction announced on December 30th.
This stake sale comes at a crucial time as the company’s founder and promoter, Gautam Adani, is facing legal challenges in the US. Federal prosecutors have alleged a bribery scheme to secure contracts in India. Adani Enterprises is hoping that this transaction will address concerns around liquidity, especially since it is the first major transaction since the Department of Justice indictment in November.
Adani Enterprises is set to raise over $2 billion through the transaction, which involves an Offer for Sale (OFS) and stake sale to a Wilmar International subsidiary. The transaction is expected to be finalized by March 2025, providing cash for further growth.
Adani Enterprises Limited (AEL) has announced its commitment to further investing in infrastructure sectors to solidify its position as India’s leading listed incubator of platforms that align with the key macro themes driving India’s growth story.
In a statement released regarding the deal, Adani Enterprises highlighted its ongoing efforts to support and contribute to the development of crucial infrastructure projects in India. This strategic focus on infrastructure development is aimed at capitalizing on the country’s rapid economic growth and increasing demand for essential services.
Prior to this recent transaction, Adani Enterprises successfully secured $500 million in funding in October. Furthermore, other companies within the Adani Group, including Adani Energy Solutions, Adani Green Energy, and Ambuja Cement, collectively raised approximately $4.5 billion in recent months. These significant investments underscore the group’s commitment to driving sustainable growth and development across various sectors in India.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.