Adani Enterprises Ltd., a prominent conglomerate, is currently exploring the possibility of selling its stake in the Mumbai-listed consumer-staple joint venture it shares with Wilmar International Ltd. This potential move aims to free up capital for their core business operations. Industry insiders familiar with the matter have revealed that Adani has been considering divesting its 44% stake in Adani Wilmar Ltd. for several months. Although the deliberations are at a preliminary stage, insiders who wish to remain anonymous due to the confidentiality of the information have indicated that Adani's shares are estimated to be worth around $2.7 billion at the present share price, as calculated by Bloomberg.
Billionaire Gautam Adani and his family may retain a minority stake in a personal capacity even after the sale, as per these sources. Conversely, Wilmar, a Singapore-based food conglomerate co-founded by billionaire Kuok Khoon Hong in 1991, could opt to retain its stake in the business. The final decision in this regard is yet to be reached.
The year has seen shares of Adani Wilmar declining by approximately 36%, attributing a valuation of approximately $6.2 billion to the company. This decline comes in the wake of significant market value erosion across various Adani-linked companies after US-based short seller Hindenburg Research levied fraud allegations against the business empire. The Adani Group has consistently denied any involvement in wrongdoing.
Adani Wilmar, known as a fast-moving consumer goods company, offers essential kitchen commodities to Indian consumers, including edible oils, wheat flour, rice, pulses, and sugar. Established in 1999, the company's products reach over 114 million households through an extensive network of more than 10,000 distributors, as outlined in its annual report. Adani Wilmar faces competition within India from industry giants like ITC Ltd. and Hindustan Unilever Ltd.
The venture reported a net loss of 790 million rupees in the quarter ending June 30. Management attributed this loss to the decrease in edible oil prices and high-cost inventory.
Despite these ongoing discussions, Adani Enterprises remains tight-lipped regarding their course of action, stating that the group won't comment on market speculations. Equally, Wilmar's representatives declined to offer any commentary on the matter.
The Adani Wilmar venture raised a significant 36 billion rupees ($435 million) through an initial public offering in Mumbai in 2022. Both Adani and Wilmar's combined stakes account for nearly 88% of the company's shares. According to the Securities and Exchange Board of India regulations, substantial firms are required to have a minimum public shareholding of at least 25% within five years of the date of listing. This stipulation could play a role in shaping the eventual outcome of the deliberations surrounding Adani's stake in the venture.
