Adani Airport Work May Need New Funding After FPO Fiasco

According to the company’s plans, over ₹5,200 crore was to be used for upgradation of the airports in Ahmedabad, Lucknow and Mangaluru, starting January 2023 to March 2024, ₹4,165 crore for repaying fully or in part, borrowings of Adani Airports Holdings Ltd, Adani Road Transport Ltd, and Mundra Solar Ltd. It also planned to use ₹2,660 crore from the net proceeds of the FPO for green hydrogen projects.

On 1 February, Adani Enterprises Ltd’s board scrapped its ₹20,000-crore FPO in the best interests of investors following the massive selloff in all group company stocks after a report by short seller based in the US alleged accounting fraud and stock manipulations by Adani companies.

While calling off the FPO will dry up a funding source, the inability of the group to tap other funding sources, under the circumstances, will further worsen its position, two people in the know said.

“A primary focus area of the fundraising programme was to put money into airports segment. They are trying to figure out alternatives for funding the investments planned at the Ahmedabad, Mangalore and Lucknow airports," said a senior official, seeking anonymity.

Another official, requesting anonymity, said they will need alternative sources of market borrowings to fund the investments planned at airports.

When Mint reached out for comments, an Adani spokesperson said lack of funds won’t impact operations and future plans. “The current FPO situation does not impact any current operation or future plans of Adani Airports. We will continue to focus on timely execution and delivery of projects."

Adani Airports earmarked ₹2,268 crore for Ahmedabad airport, ₹304 crore for Mangaluru airport, and ₹2,722 crore for Lucknow airport. Work for Ahmedabad airport includes upgradation of passenger side terminal building, and a new cargo complex, while relaying of runways, taxiway, and airside improvement are planned for Mangaluru airport . At Lucknow, upgrade plans include passenger facilities and a new fuel storage. In February 2019, the group won bids for six airports of Lucknow, Mangaluru, Ahmedabad, Jaipur, Guwahati and Thiruvananthapuram.

The group pays the Airports Authority of India, state-owned enterprise that owns these airports, a per-passenger charge. The group is responsible for operating, managing, and developing airports across 50 years.

The Adani Group also acquired a 74% stake in Mumbai’s international airport in July 2021 by picking up GVK Group’s 50.5% stake and a 23.5% stake from ACSA Global Ltd and Bid Services Division (Mauritius) Ltd (Bidvest). As a result, the group also gets to build and operate the Navi Mumbai airport.