Adani halts $847 million coal power plant acquisition in India

Gautam Adani’s electricity division halts an $847 million takeover of a coal-fired power plant in India in a sign the billionaire’s business empire is slowing spending after a short-seller attack.

The Indian tycoon conglomerate, which includes India’s largest privately owned thermal power producer, has been rocked by a stock market crisis sparked by New York-based short seller Hindenburg Research, which released a report last month blaming the group on stock manipulation and the was accused of fraud.

Adani has firmly denied the allegations, insisting the group’s debt mountain is manageable. But it has so far failed to halt the rise in yields on its bonds and the plunge in the company’s listed shares – with those of its flagship Adani Enterprises falling to lows of Rs 1,017 from highs of more than Rs 4,000 in December.

“Now Adani Power is halting or temporarily halting any further capital expansion,” said energy economist Vibhuti Garg, South Asia director of the Institute for Energy Economics and Financial Analysis. “Every new investment would be subject to close scrutiny.”

“I think they also avoid building coal plants,” Garg added.

The Adani Group did not immediately respond to a request for comment.

Widely regarded as an ally of Indian Prime Minister Narendra Modi, Adani presented himself as the architect of logistics networks and power generation that formed the backbone of India’s growing economy.

But a cut would mean a shift in strategy for the 60-year-old, who built his conglomerate during a breakneck, debt-fueled expansion, earning revenue by buying or building new projects, from solar energy to airports.

Adani Power agreed in August to buy DB Power, a company that owns and operates a profitable coal-fired power station in India’s Chhattisgarh state, and its parent company, Diliigent Power Private. The owners of Diliigent also run the newspaper business, the Bhaskar Group.

The Rs 70 billion (US$847 million) cash deal, approved by India’s competition regulator in September, had a deadline for completion of late October, which the companies then extended four times.

But on Wednesday, the final closing date, Adani Power said the parties would no longer extend the deal’s deadline.

“The long stop date per the LOI dated August 18, 2022 has expired,” the company said in an exchange filing.

In last week’s quarterly earnings reports, several Adani portfolio companies said they would be curbing capital spending for the fiscal year beginning in April.

“We will not make any new commitments until we get past this period of volatility,” Adani Group chief financial officer Jugeshinder Singh said at an analyst call following Adani Enterprises’ quarterly earnings on Tuesday.

Singh insisted ongoing projects would be completed on schedule and offered to bus analysts and investors to check on progress at a new airport near Mumbai, India’s financial capital.