Adani, Wilmar may sell part of their stake in AWL to private equity firms

The Adani group and Singapore’s Wilmar International are learnt to have approached several private equity (PE) firms to sell part of their stake in their consumer-staple joint venture, Adani Wilmar.

Top executives of some of these PE firms told Business Standard that the two partners, which own 44 per cent each in Adani Wilmar, have offered them a majority stake.

The Adani group and Wilmar International declined to comment on the matter.

The proposed sale will be one of the largest transactions in the FMCG industry, with the market valuation of Adani Wilmar standing at Rs 51,513 crore as of Wednesday.

At its peak in January this year, the company’s valuation was Rs 81,268 crore. However, the share price of the company, along with that of other group firms, had crashed following an ‘unsubstantiated’ report by US short seller Hindenburg Research accusing the Adani group of stock manipulation and accounting fraud. The Adani group has denied the allegations. The Adani group stocks have recouped a large part of the losses since then.

“A joint team of Adani and Wilmar have approached PEs for a possible stake sale and we are looking at the proposal,” the head of a large US-based PE firm said, requesting not to be named.

PEs have billions of dollars of “dry powder” (capital available for deployment) for investment in Indian companies, provided valuations are realistic, the executive said.

Health care, consumer retail, and technology are top investment destinations for PEs, and Adani Wilmar fits the bill as a consumer product company, the executive said. The Adani group may retain a small stake, he added.

In an event held last week, Jugeshinder Singh, Adani group’s chief financial officer, had said the group was studying whether to keep or divest the Wilmar stake.

The Adani group will use the proceeds of the sale to invest in a series of infrastructure and renewable power projects across the country. The group plans a total investment of $75 billion in energy transition initiatives to reach 45GW renewable energy capacity by 2030.

Adani Wilmar delivered double-digit volume growth on the back of opportunity in the packaged staple foods and strong execution in the quarter ended September 30. Rural sales grew at a faster rate due to a higher focus on increasing its rural distribution network.

The company’s edible oil segment volumes grew by around 5 per cent Y-o-Y in Q2FY24, with the branded business volumes growing at a faster rate of 12 per cent. In the food & FMCG segment, the company’s revenue from branded products grew at over 40 per cent Y-o-Y over the last eight quarters and contributed around 80 per cent to the overall segment revenue.