Billionaires: Gautam Adani on buyout spree in India’s cement sector as race with Kumar Mangalam Birla heats up

In our round-up of the world’s ultra-wealthy, Donald Trump re-enters world’s 500 richest list and Mukesh Ambani’s Jio in talks with Allianz for insurance partnership in India

Gautam Adani's business conglomerate has been scouting for more cement assets and is reported to have a war chest of $4.5 billion for acquisitions over the next two years. Bloomberg

Ambuja Cements, part of the Adani Group, has agreed to acquire Orient Cement in a deal valued at 81 billion rupees ($963 million), as Gautam Adani continues to snap up makers of the key raw material needed for India’s infrastructure push.

Ambuja will acquire 46.8 per cent shares of Orient Cement from its current founders and certain public shareholders, the company said in an exchange filing on October 22. The transaction will be fully funded by internal accruals.

It will also make an open offer for a 26 per cent stake in Orient at 395.40 rupees a share, according to the filing.

The latest acquisition adds 16.6 million tonnes of annual cement capacity for the ports-to-power conglomerate and shows an escalating asset race between Asia’s second-richest person and the sector leader, UltraTech Cement, led by billionaire Kumar Mangalam Birla.

More than half a dozen cement deals have been clinched by the Adani Group and UltraTech in two years and many smaller players are still up for grabs. UltraTech had bought a controlling stake in India Cements in July.

Orient’s “strategic locations, high-quality limestone reserves and requisite statutory approvals present an opportunity to increase cement capacity in the near term”, Karan Adani, director of Ambuja Cements and Mr Adani’s son, said in the filing.

Battle lines are being drawn in India’s cement space as Adani Group’s buyout spree rapidly adds to its 79 million tonnes capacity with a target of 140 million tonnes by 2028. UltraTech, which has a current capacity of 150 million tonnes, is looking to scale up to 200 million tonnes by March 2027.

Both the billionaires are seeking to dominate supplies of a building material that is critical to sustaining India’s drive to overhaul its infrastructure.

Indian Prime Minister Narendra Modi’s mission to build everything from airports and power facilities to roads, bridges and tunnels will spur India’s infrastructure investment to 15 trillion rupees by March 2026, according to Crisil Ratings.

Adani Group’s big bang entry in 2022 upended the local pecking order – it became the second-biggest cement maker overnight with the acquisition of Ambuja and ACC – but it spent much of 2023 firefighting, after Hindenburg Research’s scathing report.

Mr Adani’s empire only got back to its expansionist ways fully this year. As part of this revived growth spree, it has been acquiring cement makers, stoking a turf war with the entrenched incumbent.

The Adani Group has been scouting for more cement assets to expand its reach, procure key raw material – limestone reserves – and has a war chest of about $4.5 billion for acquisitions over the next two years, Bloomberg News reported in July.

Former US President Donald Trump's fortune rose to $6.72 billion on October 24, ranking him 467th on the list of the world’s 500 richest people. EPA

Donald Trump

Donald Trump has rejoined the Bloomberg Billionaires Index for the first time since August 6 as his media start-up’s stock surges alongside his odds in political betting markets.

The former US president’s fortune rose to $6.72 billion on October 24, ranking him 467th on the list of the world’s 500 richest people.

Trump Media and Technology Group, which owns Truth Social, has nearly tripled in value since late September, boosting his paper wealth.

Trump Media has been trading as a proxy for betting on the likelihood that Mr Trump will be the next US president. The odds that Mr Trump will win the November 5 election have spiked in recent weeks on betting sites Polymarket and PredictIt.

Mr Trump’s net worth is the highest it’s been since July 22, the day after President Joe Biden dropped out of the race, which led to Vice President Kamala Harris becoming the Democratic nominee.

Setting up insurance operations will help Mukesh Ambani's Jio Financial Services to pursue its ambition of becoming a financial services behemoth. Reuters

Mukesh Ambani

Jio Financial Services, controlled by billionaire Mukesh Ambani, has held talks with Allianz to set up an insurance partnership in India as the German company seeks to scrap two existing joint ventures in the country, Bloomberg reported, citing sources.

Allianz and Jio Financial are looking to establish a general insurance and a life insurance company in India, the sources said. The discussions are in early stages, they added.

Munich-based Allianz has indicated to its current partner Bajaj Finserv that it’s “actively considering an exit” from the ventures, according to a statement from Bajaj on October 22 after Bloomberg News reported the planned split.

Allianz “has indicated that it remains committed to the Indian insurance market”, according to the statement. The break-up centres around a dispute over the direction of the partnership, sources said.

An official for Jio Financial said the company is unable to comment on speculation. “If and when there are any material developments with respect to the company, we will continue to make necessary disclosures in accordance with our obligations, as we always have,” the official added.

Allianz doesn’t comment on market rumours, a Munich-based official said.

Jio Financial, helmed by veteran banker KV Kamath, already runs a shadow bank and an insurance brokerage and has joined forces with BlackRock to start an asset management business. Setting up insurance operations will help further the Ambani unit’s ambition of becoming a financial services behemoth.

India’s insurance penetration rate – the ratio of premiums to gross domestic product – is less than half that of countries such as South Africa and Canada, implying strong growth prospects for the sector, according to insurance regulator data.

Steve Schwarzman, chief executive of Blackstone, said the US is likely to avoid a recession, regardless of who wins the presidential election. Bloomberg

Steve Schwarzman

Blackstone chief executive Steve Schwarzman said the US is likely to avoid a recession regardless of who wins the presidential election, as both candidates have policy proposals that appeal to growth.

“I don’t see a recession risk because the economy is pretty strong and both the candidates keep mentioning a lot of stimulative policies,” the billionaire private equity chief told Bloomberg in Tokyo on Wednesday.

The upcoming US election, just two weeks away, is set to be one of the most impactful events for global markets and economies this year going into next.

Mr Schwarzman said in May that he would raise money for Donald Trump’s campaign, reversing his earlier call for a “new generation” of Republican leaders.

Policies the candidates have put forth would be consequential for businesses, including Blackstone, the world’s largest alternative asset manager, he said.

Mr Schwarzman said historically Democrats have taken a more “vigorous approach” to regulation, and that could impact some buying and selling for the private equity industry. Many policy proposals around the economy and taxes would be up to Congress to enact and not the president, he added.

In May, when Mr Schwarzman said he was supporting Mr Trump, he cited his concern that US economic, immigration and foreign policies were going in the “wrong direction”.

Mr Schwarzman said he sees an improving environment for making deals and exiting investments as interest rates are likely to continue to fall in the US.

“It’s really about interest rates and economic growth,” he said. “Interest rates will continue to go down and that’ll provide an impetus of more transactions both on the buy and the sell.”

Compiled from Bloomberg