Adani Total Gas Secures $375 Million for CGD Network Expansion

Adani Total Gas Ltd. (ATGL) has secured $375 million in funding from five major international lenders, marking the largest financing in the City Gas Distribution (CGD) sector. This investment is to accelerate the expansion of its CGD network across India, covering 34 authorized geographical areas in 13 states.

Details of the Deal

It starts at $315 million and can be increased further, depending on what the company plans to do in the future in terms of its fundraising. The group of lenders included in this financing arrangement consists of BNP Paribas, DBS Bank, Mizuho Bank, MUFG Bank, and Sumitomo Mitsui Banking Corporation. With this funding, ATGL will boost capex spending on PNG and CNG infrastructures. Using the capital raised, ATGL is getting ready to face the increasing demand while augmenting its share in India’s energy market.

Expansion Plans & Impact

The expansion of ATGL’s CGD network will extend its coverage to over 200 million people, representing 14% of India’s population. This development aligns with India’s energy transition goals, as the government aims to increase natural gas share in the energy mix from 6% to 15% by 2030. According to Parag Parikh, CFO of Adani Total Gas, the involvement of global lenders shows the potential of CGD as a transitional fuel in this shift.

Market Performance

Following the announcement, shares of Adani Total Gas surged over 7%, trading at Rs.847 today. Although the stock has gained 32% over the past year, it has seen a 17% decline year-to-date, compared to the 19% rise in the Nifty index.

Conclusion: With the new funding of $375, which strengthens Adani Total Gas’ position, the company is now properly positioned to contribute significantly to the development of the gas-based economy of India. While the funding from international lenders supports the company’s intention to do so, it also provides a basis for additional funding shortly following the company’s long-term capital management strategy, which is beneficial for all stakeholders.

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.