Promoters Propose To Delist Adani Power, Board To Consider Move On June 3

Energy conglomerate Adani on Friday proposed to delist the group’s power company-Adani Power from the exchanges. The company’s board will meet on June 3, to consider the proposal. If approved, this would be the first time that billionaire Gautam Adani will delist a business.

On Friday, Adani Power informed the exchanges that it had received a delisting proposal letter from Adani Properties, a member of the promoter and promoter group. In the letter, Adani Properties expressed an intention, “To either by itself, or together with other members of the promoter group, acquire all the equity shares of the company.” The proposal will be considered on June 3.

The conglomerate has so far maintained a strategy to incubate a business and monetize it through public listing at a later stage. Listed in 2009, Adani Power was one of the early public listing offerings from the conglomerate.

In its letter to Adani Power’s board, the promoter said, delisting will enable the group get full ownership and provide enhanced operational and strategic flexibility. In the letter, promoters added that the delisting would also allow flexibility for “options like corporate restructurings, acquisitions, exploring new financing structures including financial support from the promoter”.

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However, not all are convinced with the rationale behiond delisting. “The promoters already have enough control of the company. It is a bold move from the conglomerate as it sends a wrong message to shareholders of other listed entities of the group,” said an analyst who did not wish to be identified. The promoter and the promoter group own 74.97 per cent of the voting rights in Adani Power.

Adani Gas, Adani Transmission, Adani Ports and SEZ, Adani Green Energy and Adani Enterprises are the other listed companies of the conglomerate.

With this, Adani Power becomes the second company to announce a delisting this month. On May 12, Anil Agarwal-led Vedanta announced the company would voluntarily delist from the two exchanges.

“Many of these cases (of proposed delisting), may be due to the prevailing market price, which is half of the book. Promoters may be seeing an opportunity in delisting and bringing it back after a couple of years,” said a senior industry expert, who did not wish to be identified. In the last three months, Adani Power’s share prices has fallen 23 per cent, and closed at 36.4 per share on Friday. As on February 28, the company’s stock was trading at Rs 47.3 per share.

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Concerned officials at Adani Power refused to share any further details on the development.

Adani Power operates 12,450 MW of power generation capacity in India. With a total gross debt of Rs 55,198 crore and an a loss of Rs 2275 crore for FY2020, the company is under financial stress. The company’s 4000 MW Mundra power plant in Gujarat has been a drag on its financial performance and debt. The Mundra plant has been struggling financially for the last few years owing to higher prices of imported coal and lower power tariffs. As of March, promoters of the company held 24.33 per cent of the total equity of the company. Analysts point out that promoters will now need to draw out new terms of debt with the lenders, who hold these pledged shares.