Adani group to exit FMCG venture with Wilmar to raise $2 billion

The deal will be done in two steps. Lence Pte. Ltd, a wholly-owned subsidiary of Wilmar International Limited will acquire 31.06 per cent shares held by Adani Commodities (ACL) in Adani Wilmar. In addition, Adani Enterprise will divest 13 per cent shares in the company to achieve compliance with minimum public shareholding requirements.

With completion of these two legs, Adani Enterprise Ltd (AEL)would completely exit its 44 per cent holding in the firm. Adani Wilmar had market capitalisation of ₹42,785 crore ($5. billion) as on Friday 27 Dec.

“AEL will use the proceeds from the sale to turbocharge its investments in the core infrastructure platforms in energy & utility, transport & logistics and other adjacencies in primary industry. AEL will continue to invest in infrastructure sectors which will further strengthen AEL’s position as India’s largest listed incubator of platforms playing the key macro themes underpinning India’s growth story,” said a press statement.

businessline had earlier reported that the Adani group, whose founder and other senior officials are being investigated by US authorities over bribery allegations, is likely to take recourse to promoter stake sales in portfolio companies or a domestic issuance, to raise funds to meet requirements in the short term. The Adani Wilmar deal could be the start of other stake sale by the group.

The exit comes at a time when FMCG players have been facing margin pressures over the last few quarters. Adani Wilmar had reported a profit of ₹311.02 crore during the second quarter of the current fiscal compared to a loss of ₹130.73 crore in the same period last fiscal year.

On Monday, Adani Enterprise’s board of directors also adopted a resolution noting the resignation of ACL’s nominee directors from the board of Adani Wilmar. The parties have agreed to take further steps for change of name of ‘Adani Wilmar Ltd’. Wilmar was one of Adani’s first joint venture partner when the group decided to diversify its business 25 years ago. Over the last two decades, the company has emerged as one of the largest edible oil and food business with brands like Fortune and Kohinoor. It has 24 factories spread across 15 cities. Singapore-based Wilmar International said it will look for another strategic investor to grow the company going forward.