Stock - Adani
Indian billionaire Gautam Adani is also exploring partnerships with Saudi Aramco. Image Credit: Bloomberg

Dubai: Abu Dhabi-based strategic investment company International Holding Company (IHC) will invest Dh7.3 billion ($2 billion) in three companies owned by India’s Adani Group.

The deal, which is being made by issuing preferential shares, will see IHC investing in Adani Green Energy (AGEL), Adani Transmission (ATL) and Adani Enterprises (AEL).

IHC will invest Dh1.83 billion ($500 million) in AGEL, Dh1.83 billion ($500 million) in ATL and Dh3.67 billion in AEL ($1 billion), in compliance with SEBI regulations. The transaction is expected to be completed in a month after all necessary approvals are obtained.

The capital will be utilized for pursuing the growth of the respective businesses, further strengthening of the balance sheet and for general corporate purposes, the companies said in a statement.

“We are delighted to commence this inter-generational relationship with IHC,” said Sagar Adani, Executive Director, AGEL. “We are deeply committed to the shared vision and values of investment in sustainable infrastructure, green energy, and energy transition.”

“This is a landmark transaction and marks a start of a wider relationship between Adani Group and IHC and attracting further investment from UAE into India.”

The boards of AGEL, ATL, and AEL met and approved the transaction. The investment is subject to shareholder and regulatory approvals and shall comply with SEBI regulations.

“This will be a long-term investment in India as the country is driving much innovation globally, including the green energy sector,” said Syed Basar Shueb, CEO and managing director of IHC.

“The opportunity to earn a compelling return on investment in green energy has never been greater. We are confident that Adani companies will play a significant role in unleashing India’s total green energy potential, reflecting positively on our shareholders’ commitment,” he added.

Not the first

This is not IHC’s first deal this year. In February, the company completed its acquisition of a 70 per cent stake in Arena Events Group, an event structures and entertainment services business, for Dh239.8 million.

Last year in December, IHC bought a majority stake in real estate firm Al Qudra Holding. Al Qudra’s projects include Manarah Bay, a mixed-use project covering about 52,000 square meters, in Abu Dhabi and Barary Ain Al Fayda Development in Al Ain, a project comprising 2,500 residential units.

Trade deal

The deal comes after India and UAE signed a comprehensive economic partnership agreement (CEPA) earlier this year, which is expected to benefit about 90 per cent of trade between the two countries.

The trade pact will provide significant benefits to Indian and UAE businesses, including enhanced market access and reduced tariffs. It is expected that the CEPA will lead to an increase in bilateral trade from the current $60 billion to $100 billion in the next five years.

Recent years have also witnessed several major foreign direct investment partnerships between India and the UAE. In June 2020, for example, Mubadala invested $1.2 billion in India’s telecommunications provider Jio Platforms. In 2019, UAE entities committed $7 billion to create a food corridor between the UAE and India. Meanwhile, India’s Reliance and Abu Dhabi’s Abu Dhabi Chemicals Derivatives Company (TA’ZIZ) recently announced the launch of a $2 billion chemical production partnership in Ruwais.