Adani Group is set to exit the edible oil business by selling its 43.94% stake in Adani Wilmar Ltd (AWL), a company that manufactures and markets food products under the ‘Fortune’ brand. The move comes as part of a strategic shift and will involve both a sale to its joint venture partner, Wilmar International, and a public market transaction. This decision, which could raise close to $2 billion, will allow Adani Group to focus on its core infrastructure sectors while complying with minimum public shareholding (MPS) requirements.
Adani Wilmar: Details of the Transaction
The transaction involves Wilmar, based in Singapore, purchasing a 31.06% stake in Adani Wilmar at a price not exceeding ₹305 per share. This deal is a significant step in Wilmar’s strategic growth in India’s agri-food market. Meanwhile, Adani will sell about 12.88% of its stake in the open market to fulfill MPS requirements.
Following this deal, Wilmar will become the majority stakeholder, holding a total of 75% in AWL. The company has indicated that it plans to seek additional investors to participate in AWL’s growth story. As per the agreement, the purchase will only happen once the MPS compliance, which is 25% for a listed entity, is reached. This is expected to take about 12 months, with an additional six months to conclude the deal. The parties involved are exploring ways to expedite the process.
Impact on Adani Wilmar’s Stock and Performance
Adani Wilmar’s stock has shown a slight dip, closing at ₹329.5 per share, which is 0.17% lower than the previous trading session. This price is slightly below the maximum agreed price of ₹305 per share for the Wilmar purchase, reflecting a discount of around 7.4%. On the other hand, Adani Enterprises saw a significant jump in its stock price, rising by 7.65%, or ₹184.2, to close at ₹2,593.45 on the Bombay Stock Exchange (BSE).
In the fiscal year 2023-24, Adani Wilmar reported a revenue of ₹49,242 crore and a profit after tax of ₹278.16 crore, indicating a stable financial performance. The company operates 24 factories in 15 cities, boasting a distribution network of 10,000 distributors and 7.2 lakh retail outlets across India.
Adani Group’s Future Plans and Wilmar’s Expansion
The exit from the edible oil business will provide the Adani Group with substantial funds, which it plans to use to strengthen its core infrastructure platforms, such as energy, transport, logistics, and utilities. The funds from the sale will help Adani Enterprises Ltd (AEL) expand both organically and through acquisitions, further solidifying its position in the market.
Wilmar’s move to acquire Adani Wilmar is also part of its larger plan to strengthen its presence in India and the broader Indian subcontinent, which includes countries like Bangladesh, Sri Lanka, and Pakistan. The region is seen as a high-growth area for Wilmar’s agri-food business. Wilmar’s portfolio includes a variety of food products, including rice, flour, and edible oils, which are well-known under the Fortune brand. The acquisition will further enhance its ability to source raw materials and integrate trade flows into Wilmar’s global network.
Looking Ahead: Future Growth Prospects for Wilmar and Adani Group
This transaction marks a major change for both the Adani Group and Wilmar. With Adani Wilmar transitioning into a subsidiary of Wilmar, the latter will benefit from enhanced supply chain management, greater market reach, and access to India’s rapidly growing food and edible oil market.
For Adani Group, the sale will provide additional capital, allowing the conglomerate to focus on its infrastructure projects. The capital raised will further fuel Adani’s aggressive expansion plans. The company had previously raised $500 million in October, with other subsidiaries like Adani Energy Solutions Ltd, Adani Green Energy Ltd, and Ambuja Cement also raising funds in recent months, showing the group’s ongoing efforts to boost its financial strength.
The Adani Wilmar exit and sale of its shares reflect a strategic shift for the group, as it moves away from the edible oil sector and continues to concentrate on sectors with greater growth potential. With the deal expected to conclude in the coming months, all eyes will be on how the transaction unfolds and how it impacts the market in the long run.
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