The second largest fortune in the world deserves special attention


Gautam Adani’s rise to No. 2 in the global wealth rankings, mostly from locally traded stocks, deserves the spotlight – as much as a poster of self-reliance “Make in India” by Narendra Modi as an opportunity for much-needed transparency about the tycoon’s investors.

In India’s eight years in power, the first-generation entrepreneur from his home state of Gujarat rose from relative obscurity and eclipsed Jeff Bezos of Amazon.com Inc. No other man Asian business never soared – not when Japan Inc bought everything in the 1980s, or when the meteoric rise of China held the world in suspense 20 years later.

The four Japanese who took the top spots in Forbes’ inaugural 1987 list of international billionaires – wealthy Americans were counted separately at the time – had a combined wealth of around $50 billion, or $130 billion in cash of today. Adani is worth nearly $145 billion, according to the Bloomberg Billionaires Index. Isn’t that a good reason for the market to know the main shareholders of such a great fortune?

To that end, a commendation ceremony by the Securities and Exchange Board of India, the market regulator, for the offshore funds that have backed the billionaire would be a fitting tribute. It would also be a great motivator for the lay investing public. They would meet the savvy investors who helped make Adani’s commodities, energy and transportation empire the $255 billion stock market juggernaut it is today, even when annual net income combined of its seven publicly traded companies is less than $2 billion.

Everyone should hear from the managers of the Elara India Opportunities Fund, which has raised $4.2 billion – virtually all of its assets under management – from three stocks: Adani Transmission Ltd., Adani Enterprises Ltd. and Adani Total Gas Ltd. APMS Investment Fund Ltd., whose $3.6 billion portfolio also includes Adani Power Ltd., did so with four.

There are three other such Mauritius-based entities among the major shareholders: Cresta Fund Ltd., LTS Investment Fund and Vespera Fund Ltd. A sixth, Albula Investment Fund Ltd., exited Adani Companies, its portfolio shrinking to about $240 million from $1.6 billion in December, according to Bloomberg data. Between them, these ad-shy investors together own $12 billion worth of Adani stock.

One can understand the reluctance of these funds to be in the public spotlight: before getting lucky with Adani, four of them – Elara, Cresta, Albula and APMS – held significant stakes in two companies whose founders fled India and have since been probed for money. laundry; another went bankrupt; and a fourth was liquidated after falling out with the Ethiopian government, Bloomberg News reported in July last year.

The Indian market faltered last summer following a media report that three of six offshore funds had their accounts frozen by the country’s national securities depository. Adani called the report “demonstrably wrong”, the custodian provided a clarification and, in response to a lawmaker’s question in parliament, India’s deputy finance minister, Pankaj Chaudhary, said neither the funds nor the companies of Adani were under investigation by the Directorate of Law Enforcement, the agency that investigates serious financial crimes such as money laundering and back and forth.

As the group’s chief financial officer, Jugeshinder Singh, explained at the time, Adani companies are new entrants to public markets. They ended up with a similar group of shareholders when they spun off from Adani Enterprises, the flagship. As for who they are and the source of their funds, those questions should be asked of the offshore managers themselves, he said.

Trouble is, Bloomberg News couldn’t find contact details for Markus Beat Dangel, Anna Luzia Von Senger Burger and Alastair Guggenbuchi-Even and Yonca Even Guggenbuehl, the names Chaudhary gave to parliament as officials of Cresta, Albula and APMS, respectively.

The International Consortium of Investigative Journalists’ “Offshore Leaks Database” lists Beat Dangel as legal representative and director of Malta-based Lascaris Capital Fund and Prime Pan-Asia Investment Fund. The ICIJ website has a Swiss address for Beat Dangel. Guggenbuchi-Even is the managing director and partner of the Zurich-based Monterosa Group, according to his LinkedIn profile. When Indian opposition MP Mahua Moitra asked parliament if the residents of Monterosa were being investigated by Indian agencies, the minister said no. As part of its job of ensuring the integrity of the Indian stock markets, the regulator must have full knowledge of these fund patterns. So he should go ahead and invite them. Raj Bhatt, the chief executive officer of London-based Elara Capital, should be easy to get: he recently hosted an investment event in Mumbai, which Indian Finance Minister Nirmala Sitharaman attended virtually.

These smart investors must have known early on what analysts are now beginning to recognize: Adani is not just any conglomerate. The coal it extracts, passes through its ports and burns in its power stations provides electricity to the Indians. Adani supplies families with piped gas when they sit down to dinner, in which the cooking oil is also its own, and the wheat likely stored in its warehouses.

The new structures that will grace the landscape of an underbuilt India over the next two decades will take construction materials from Adani, which has just acquired 70 million tonnes of cement capacity and now wants to double it in five years. . The businessman will collect tolls on roads in Gujarat and Andhra Pradesh states, and host Indians’ data as they browse the internet, waiting for a flight to depart from one of its airports. He will also help to book plane tickets. And before you complain about the impact of coal, cement, palm oil and data centers on the environment, Adani says he will invest $70 billion to “cool the planet” with energy. hydrogen, wind turbines and solar panels.

Make inroads into media and small business money lending, and Adani could soon take more of an average Indian’s life than Amazon will ever squeeze out of a typical American’s wallet. Investors who backed this grand vision should realize that their reluctance deprives retail shareholders of sound wealth-building advice and leaves them at the mercy of experts who peddle the virtues of diversification.

The lack of publicity for the stock success story – the shares of Adani Green Energy Ltd. jumped 4,500% in the past three years – also draws too much attention to debt. Nowhere are group bonds doing as well as stocks. Fitch Ratings’ CreditSights unit did not reveal exactly a secret when it wrote last month that “Adani enjoys a strong relationship with the ruling Modi administration” and that “political tailwinds” are supporting the development of infrastructure assets. Although Adani, 60, has said he neither receives nor expects special treatment from the government, this alignment has certainly served him well. However, it was CreditSights’ characterization of the conglomerate as “deeply over-indebted” that the Adani Group strenuously disputed, saying gross debt was not the 2.3 trillion rupees ($29 billion) estimated by analysts. from the research company, but less than 1.9 trillion rupees. .

Subtract cash on hand and include the full profit-generating potential of projects that have yet to be executed for a full year, and net debt is just over three times earnings before interest, taxes, depreciation, and amortization , compared to 7.6 times in 2013, the year before Modi came to power. Further, to the point of CreditSights that he sees “little evidence of developer equity injections into group companies,” Adani said in his 15-page rebuttal that he raised $16 billion over the course of over the past three years with renowned investors, including French TotalEnergies SE, Abu Dhabi-based International Holding Co., Qatar Investment Authority and Warburg Pincus LLC.

All good, but what about non-brand investors? Once again, the contribution of Mauritian funds to the empire was ignored. That won’t be enough. The silent soldiers behind the world’s second largest personal fortune have long awaited recognition. They also deserve careful consideration.

More from Bloomberg Opinion:

• In India, it’s old money against billions of Adani: Andy Mukherjee

• India’s billionaire race sees one step away: Andy Mukherjee

• India’s withdrawal could thwart its rise: Andy Mukherjee

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia. Previously, he worked for Reuters, the Straits Times and Bloomberg News.

More stories like this are available at bloomberg.com/opinion

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