Adani Group aims to retain a 7% stake in its packaged goods joint venture, Adani Wilmar Ltd, following a proposed share sale to global alternative investors, according to people familiar with internal discussions. The Indian infrastructure company, along with its international partner Wilmar International, will retain a 51% stake in the business, they added.
While Adani Group has decided to lower its investment in the company in order to focus on its major infrastructure business, the company still wants to maintain some control over Adani Wilmar, according to the people who preferred to remain anonymous.
Currently, Adani Group and Wilmar own 87.87 percent of Adani Wilmar. Established in 1999, Adani Group and Wilmar each control 43.97 percent of the packaged goods joint venture, which sells edible oil and other commodities under the Fortune brand.
In a December statement to stock exchanges, the company stated that its promoter entities would sell up to 1.24 percent of the company's total paid-up equity share capital in one or more tranches from December 26 to January 31, or the actual date of completion of the sale of all shares, whichever comes first.
"A number of potential investors have been contacted, and discussions are currently underway regarding valuation and stake size," one of the individuals listed above stated. "Those approached include Middle Eastern sovereign funds as well as US- and Australia-based private equity funds." It is unclear whether any of the transactions will result in a mandatory open offer under Sebi's acquisition guidelines. As of Wednesday morning, emails requesting comments from Adani Group and Wilmar officials had not been responded to.
"In the given situation, bringing in a strategic investor such as another FMCG company is not viable," stated an additional source. "At the same time, offloading stake via block deals to regular market participants may not be an option either because traditionally the company has not attracted significant interest from domestic and foreign institutional investors" , a source said.
According to the most recent market data, mutual funds retained their 0.06 percent stake in Adani Wilmar during the December quarter, increasing the number of schemes investing in the company from 17 to 19. Foreign institutional investors, on the other hand, boosted their position by a small margin to 0.65% this quarter.
Adani Wilmar reported an 18% volume increase over the previous year in the six months ended September 30, driven by higher consumer demand and lower edible oil prices. Revenues for the first half of the fiscal year, however, fell 13% due to a sharp drop in edible oil prices.
