Adani Enterprises to Raise $1 Billion for Green Hydrogen Expansion via QIP

Adani Enterprises has announced that it is set to raise $1 billion through a Qualified Institutional Placement (QIP) to boost its green hydrogen projects, as  a key part of the company’s strategy to establish itself as a leader in India’s renewable energy sector, particularly in the production of green hydrogen, which is essential for reducing carbon emissions and achieving global climate targets. 

Targeted Use of Funds

The funds from the QIP will primarily support Adani New Industries, the division dedicated to green hydrogen. This funding is a component of Adani’s larger capital expenditure plan, which includes an ambitious Rs.80,000 crore allocation for FY25. Of this, Rs.50,000 crore is set aside for the new energy ecosystem and airport businesses, with green hydrogen being a focus.

QIP Details & Market Strategy

The transaction, expected to launch by mid-September, will see Adani Enterprises offering shares to institutional investors. The QIP was initially launched post-market hours on July 30, with a base deal size of Rs.5,861 crore (approximately USD 700 million). Additionally, it included a green shoe option, allowing the company to increase the issue size up to Rs 8,373 crore (about USD 1 billion), depending on demand.

Adani Enterprises has appointed ICICI Securities, SBI Capital Markets, and Jefferies to manage the share sale. The decision to pursue this QIP follows the company’s withdrawal of a $2.5 billion FPO in February 2023, after allegations by US short-seller Hindenburg Research. Adani has consistently denied these allegations.

Management Commentary

Saurabh Shah, Deputy CFO of Adani Enterprises assured analysts that other major capex plans, including those for airports, roads, data centers, PVC, and copper businesses, are fully funded. “With Adani New Industries already generating substantial cash from its ongoing expansions, we expect to have enough capital to meet the equity needs for the next 1-2 years. The QIP will specifically fulfill the equity requirements for Adani New Industries,” he added.

Conclusion: In conclusion, Adani Enterprises’ $1 billion QIP is crucial for their  green hydrogen expansion plans . By securing these funds, the company is ensuring it remains in its position in the country’s energy transition and expands further in this industry.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.