The four Japanese who topped Forbes’ first 1987 list of international billionaires — the rich Americans were counted separately then — had a combined wealth of about $50 billion, or $130 billion in today’s money. Adani is worth nearly $145 billion, according to the Bloomberg Billionaires Index. Surely that is a good reason for the market to know the major shareholders behind such a large fortune?
To that end, a felicitation 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 lay people investing. They would get to meet the savvy investors who helped make Adani’s commodities, energy and transportation empire the $255 billion stock market it is today, even when the combined annual net income of its seven listed companies is less than 2 billion dollars.
Everyone should hear from the managers of the Elara India Opportunities Fund, which has amassed $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., has done so with four.
There are three more of these Mauritius-based entities among major shareholders: Cresta Fund Ltd., LTS Investment Fund and Vespera Fund Ltd. A sixth, Albula Investment Fund Ltd., has exited Adani businesses, its portfolio down to about $240 million from $1.6 billion in December, according to Bloomberg data. Together, these ad-shy investors own a combined $12 billion in Adani shares.
One can understand the reluctance of these funds to be in the public eye: before they got lucky with Adani, four of them – Elara, Cresta, Albula and APMS – had significant stakes in two companies whose founders fled India and have since been investigated for money laundering; another went bankrupt; and a fourth was liquidated after sparring with the Ethiopian government, Bloomberg News reported last July.
The Indian market reeled last summer on a media report that three out of six offshore funds had seen their accounts frozen by the country’s national securities depository. Adani called the report “manifestly erroneous”, the depositary issued a clarification and, in response to a lawmaker’s question in parliament, India’s junior finance minister Pankaj Chaudhary said neither the funds nor the Adani firms were being investigated by the Enforcement Directorate, the agency that investigates serious financial crimes such as money laundering and roundabouts.
As Jugeshinder Singh, the group’s chief financial officer, explained at the time, Adani companies are new players in public markets. They ended up with a similar bunch of shareholders when they were spun off from Adani Enterprises, the flagship. As to who they are and the source of their funds, those questions should be asked of the offshore managers themselves, he said.
The problem is that Bloomberg News could not find contact information for Markus Beat Dangel, Anna Luzia Von Senger Burger and Alastair Guggenbuchi-Even and Yonca Even Guggenbuehl, the names Chaudhary gave in parliament as responsible for Cresta, Albula and APMS respectively.
The International Consortium of Investigative Journalists “Offshore Leaks Database” lists Beat Dangel as a legal representative and director of the Malta-based Lascaris Capital Fund and Prime Pan-Asia Investment Fund. The ICIJ website has a Swiss address for Beat Dangel. Guggenbuchi-Even is managing director and partner of Zurich-based Monterosa Group, according to his LinkedIn profile. When Indian opposition lawmaker Mahua Moitra asked in parliament whether people in Monterosa are under investigation 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 managers. So it should go ahead and invite them over. Raj Bhatt, the London-based chairman and CEO of Elara Capital, should be easy to get hold of: He hosted an investment event in Mumbai recently, with Indian Finance Minister Nirmala Sitharaman virtually in attendance.
These smart investors must have known early on what analysts are now beginning to recognize: Adani’s is not just any conglomerate. The coal he mines, moves through his ports and burns in his power plants, supplies electricity to the Indians. Adani supplies families with piped gas when they sit down to dinner, with the cooking oil also being his and the wheat probably stored in his warehouses.
The new structures that will grace the landscape of an underdeveloped India over the next few decades will take building 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 the states of Gujarat and Andhra Pradesh and host Indians’ data as they surf the Internet and wait for a plane to take off from one of his airports. He will also help 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 green hydrogen, wind turbines and solar panels.
Throw in media and small business lending, and Adani could soon have a bigger slice of the average Indian’s life than Amazon will ever get from the typical American’s wallet. The investors who supported this grand vision should realize that their reluctance is robbing retail shareholders of solid wealth-building advice and leaving them to pundits selling the virtues of diversification.
The lack of mention of the equity success story – the shares of Adani Green Energy Ltd. is up 4,500% over the past three years – also brings too much attention to debt. The group’s bonds do nowhere near as well as stocks. Fitch Ratings’ unit CreditSights wasn’t exactly revealing a secret when it wrote last month that “Adani has a strong relationship with the ruling Modi administration” and that “political tailwinds” support the development of infrastructure assets. While Adani, 60, has said he does not receive or expect special treatment from the government, this adjustment has certainly served him well. However, it was CreditSights’ characterization of the conglomerate as “deeply over leveraged” that the Adani group strongly disputed, arguing that gross debt was not the 2.3 trillion rupees ($29 billion) estimated by the research firm’s analysts, but less than 1.9 trillion rupees . .
Subtract the cash and include the full potential to generate profits for projects that have yet to run for a full year, and net debt is just over three times earnings before interest, tax, depreciation and amortization, down from 7.6 times in 2013 , the year before Modi came to power. Moreover, to CreditSights’ point that it sees “less evidence of promoter equity injections in the group companies,” Adani said in its 15-page rebuttal that it has raised $16 billion in the past three years from marquee investors including France’s TotalEnergies SE , Abu Dhabi-based International Holding Co., Qatar Investment Authority and Warburg Pincus LLC.
All that is fine, but what about non-marquee investors? Once again, the contribution of the Mauritius-based foundations to the empire was ignored. This won’t do. The silent soldiers behind the world’s second largest personal fortune have delayed their recognition. They also deserve some scrutiny.
More from Bloomberg Opinion:
• In India, it’s old money versus Adani billions: Andy Mukherjee
• India’s billionaire race sees one pull away: Andy Mukherjee
• India’s inward turn could slow its rise: Andy Mukherjee
This column does not necessarily reflect the opinion of the editors or Bloomberg LP and its owners.
Andy Mukherjee is a Bloomberg Opinion columnist covering industrials and financial services in Asia. Previously, he worked for Reuters, the Straits Times and Bloomberg News.
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