TotalEnergies SE is in talks to invest in renewable energy projects developed by Adani Green Energy Ltd., people familiar with the matter said, potentially marking the first public deal between the French oil giant and Gautam Adani since a short-seller leveled fraud allegations against the Indian billionaire’s business empire.
(Bloomberg) — Sign up for the India Edition newsletter by Menaka Doshi – an insider’s guide to the emerging economic powerhouse, and the billionaires and businesses behind its rise, delivered weekly.
TotalEnergies SE is in talks to invest in renewable energy projects developed by Adani Green Energy Ltd., people familiar with the matter said, potentially marking the first public deal between the French oil giant and Gautam Adani since a short-seller leveled fraud allegations against the Indian billionaire’s business empire.
Total is looking to buy stakes in some of Adani Green’s projects as part of its drive to expand its portfolio of clean energy projects, said the people, who asked not to be identified as the discussions are private. The French group could invest about $700 million in total into the projects, one of the people said.
Shares of Adani Green rose as much as 2.9% in Mumbai on Friday, touching the highest level in more than a week.
Deliberations are ongoing and there’s no certainty for a transaction, the people said. Representatives for Adani and Total declined to comment.
The deal would increase Total’s presence in the fast-growing Indian energy market, while giving Adani Green more means to develop new renewable energy projects. It would also see Total deepen its ties with Adani Green, which it’s already the second largest shareholder of with a 19.75% stake, according to data compiled by Bloomberg.
Close Partnership
Total has frequently partnered with Adani as the French giant looks to boost its clean-energy output, in an effort to mollify shareholders demanding greater efforts to fight climate change. That aspiration dovetails with India’s ambitions to become a net-zero carbon nation by 2070 and curb its reliance on oil and coal.
In 2019, Total spent $600 million to buy a 37.4% stake in Adani Gas Ltd., now called Adani Total Gas. In 2021, it bought a 20% stake in Adani Green as well as a 50% interest in some of Adani Green’s solar farms in operation in a $2.5 billion deal that was among the largest foreign investments in India.
The bet on Adani Green worked well for Total as its value soared to $10 billion in 2022 when Chief Executive Officer Patrick Pouyanne described the stake as “a source of potential cash.” The duo were looking to partner up and fund billions of dollars worth of green hydrogen development in India.
However, when Hindenburg Research accused the Adani Group of “brazen” market manipulation and accounting fraud earlier this year, Total put a plan to develop about $5 billion of green hydrogen projects with Adani Enterprises Ltd. on hold. The Adani Group strongly denied the allegations by the short-seller.
What Bloomberg Intelligence Says
“A potential $700 million investment from TotalEnergies in Adani Green Energy’s projects, as reported by Bloomberg News, could improve the Indian firm’s liquidity and balance sheet. Net debt-to-Ebitda may improve by about 0.7x and the investment would help fund capex, projected at 140 billion rupees ($1.7 billion) for fiscal year ending March 2024. A deal may also signal improving funding access for the Adani Group, even as governance concerns linger.”
— Sharon Chen, BI credit analyst
Read the full report here.
Adani’s stocks and bonds have recouped some losses since the short-seller report, particularly after the group received investment from GQG Partners, and an interim report from an Indian Supreme Court-appointed panel in May said it found no evidence of stock-price manipulation. Adani Enterprises, which incubates the tycoon’s businesses, in the quarter through March reported that its profit doubled to 7.22 billion rupees ($87 million).
Adani Green said in July that it plans to raise 123 billion rupees to bankroll expansion through selling shares to institutional investors.
(Updates with Adani Green’s share moves in third paragraph and BI analyst comment.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.