Abu Dhabi's IHC to invest $381m in Adani Enterprises

India a 'key investment destination' for conglomerate, chief executive says

Adani Enterprises is a part of the Adani Group, controlled by Gautam Adani, one of the world's wealthiest people. Reuters

International Holding Company, the UAE's most-valuable listed company, will invest Dh1.4 billion ($381 million) in the follow-on share sale floated by Indian billionaire Gautam Adani’s flagship business last week.

The investment in Adani Enterprises' $2.5 billion further public offering (FPO) is IHC's first this year and part of the Abu Dhabi conglomerate's efforts to scale up and diversify its investments globally, it said on Monday.

The investment will be made through the group's subsidiary, Green Transmission Investment Holding.

“For the past three years, India has been a key investment destination for IHC," Syed Shueb, chief executive of IHC, told The National on Monday. "It is a large market that presents opportunities with monetary economic stability.

"Our trust in the Indian regulatory body for securities markets makes India an attractive destination for IHC."

IHC will be eyeing more acquisitions throughout this year, focusing on fast-growing economies, rapidly expanding equity markets and top investment destinations, it said.

It aims to increase its global acquisition by 70 per cent by the end of the year, with the clean energy and food processing sectors being a key focus. It will seek opportunities in Europe, Africa, Asia and South America, the company said.

"We are watching the international market closely for new prospects and we will continue exploring further opportunities outside our traditional market in 2023," Mr Shueb said.

IHC's investment comes as Adani Group is embroiled in a controversy after US investor Hindenburg Research last week said it was shorting the conglomerate's stocks.

In a January 24 report, Hindenburg accused companies controlled by Mr Adani, Asia’s richest man, of being involved in "brazen" market manipulation and accounting fraud.

Shares of the companies under the Adani Group umbrella plummeted as a result, with losses continuing on Monday. Companies in the conglomerate have lost a combined $68 billion in market capitalisation since Wednesday.

Late on Sunday, Adani Group fired back at Hindenburg, saying in a 413-page response that it had complied with all local laws and had made the necessary regulatory disclosures.

IHC on Thursday announced its interest to bid for the Adani Group's follow-on sale of shares, which began on Friday and runs until Tuesday.

"Our business decisions are purely based on an analysis of objective facts, aided by the use of business intelligence and our analytics tools, which help us to achieve the maximum benefits for our shareholders under the corporate governance regulation," Ahmad Ibrahim, IHC's head of marketing and corporate communication, told The National last week.

Monday's announcement is the second deal that IHC has forged with Adani Group after last year's Dh7.3 billion investment in three green-focused companies of the Indian conglomerate.

"The advantage of the [Adani] FPO is the historical reference for the company's earnings report, management, business practices and much data to bank on before making any investment decision," Mr Shueb said in the statement.

“Our interest in Adani Group is driven by our confidence and belief in the fundamentals of Adani Enterprises; we see strong potential for growth from a long-term perspective and added value to our shareholders."

IHC was founded in 1998 as part of a move to diversify and develop non-oil business sectors in the UAE. The company had a market value of more than Dh878.5 billion at the close of trading on Monday.

In November, the company reported it had tripled its net profit to more than Dh6.4 billion in the third quarter of last year, while revenue grew by about 48 per cent to Dh12.4 billion.

In October, IHC made a foray into the South American market with a Dh734 million investment in Lulo Colombia, the holding company of Colombia’s first regulated digital bank, in which it acquired a 49.99 per cent stake.

IHC also boosted its portfolio by acquiring a 54 per cent stake in Abu Dhabi ICT provider Emircom for Dh250 million, and a 15 per cent stake in healthcare services provider Burjeel Holdings.