Adani Pledges Shares Worth US$13bn in ACC, Ambuja Cements with Deutsche Bank
Moneylife Digital Team 22 September 2022
Soon after the acquisition, the Adani group pledged shares worth US$13bn (billion) in ACC Ltd and Ambuja Cement Ltd, which it bought from Switzerland-based Holcim Ltd. According to Jefferies Financial Group Inc, the acquisitions give Adani group access to about Rs11,000 crore or about US$1.4bn of cash with the two listed companies.
 
In separate regulatory filings, both, ACC and Ambuja Cement, submitted disclosures under regulation 29(1)/ 29(2) of SEBI (Substantial Acquisition of Shares & Takeovers) regulations, 2011, for Deutsche Bank AG's Hong Kong branch. It says, "Endeavour Trade and Investment Ltd (ETIL) and Xcent Trade and Investment Ltd (XTIL) have borrowed under facility agreements dated 25 July 2022 and note trust deed dated 9 September 2022 with, inter alia, Deutsche Bank AG, Hong Kong Branch (DB). Under certain deeds of fixed and floating charge, charge over 100% shares in ETIL, XTIL and Holderind Investments Ltd (Holderind) have been created in favour of DB. Non-disposal undertaking (NDUs) have been provided over the shares in target company (TC) held by Holderind."
 
Endeavour Trade and Investment is a newly incorporated company and belongs to the Adani group. Holderind Investments is a holding company of Ambuja Cement and ACC. 
 
Stakes of around 57% of ACC and 63% in Ambuja Cements have been encumbered "for the benefit of certain lenders and other finance parties," the regulatory filings say.
 
According to a report from Economic Times, the pledge comes as the tycoon’s ambitious dealmaking in an array of new sectors, from green energy to media, raises concerns over the high level of debt across the Adani group. "While the conglomerate has moved to curtail some pledges across its listed entities, other units continue to have elevated leverage ratios that stand out among peer companies globally," the report says.  
 
In a note, Prateek Kumar, an analyst at Jefferies, wrote that along with Rs20,000 crore fund infusion from their new owners, the combined entity has enough of a 'war chest to scale up new expansions, organically or inorganically'.”
 
Before selling, Holcim, through its subsidiaries, held 63.19% in Ambuja Cements and 54.53% in ACC (of which 50.05% is held through Ambuja Cements). The value for the Holcim stake and open offer consideration for Ambuja Cements and ACC was about US$10.5bn, which makes this the largest-ever acquisition by Adani and India's largest ever merger and acquisition (M&A) transaction in the infrastructure and materials space.
 
As per an agreement signed on 15 May 2022, Endeavour Trade And Investment acquired 4.48% stake in ACC Ltd from Holcim for Rs19.3bn at Rs2,300 per share. In related transaction, Endeavour Trade And Investment also acquired 63.11% stake in Ambuja Cements from Holderind Investments. 
 
Last month, the Competition Commission of India (CCI) approved the acquisition of the stake in Holderind Investments, Ambuja Cements and ACC by Endeavour Trade and Investment. 
 
At 3.10pm Thursday, ACC was trading marginally up at Rs2,549.95, while Ambuja Cement was down 1.05% at Rs535.80 on the BSE, and the 30-share Sensex was 342 points down at 59,098.79 points.
 
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