Adani Group may keep around 7% in joint venture Adani Wilmar

Established in 1999, Adani Group and Wilmar hold 43.97 percent each in the packaged foods joint venture that sells edible oil and other staples under the Fortune brand

Adani Group plans to retain a 7 percent stake in its packaged goods joint venture, Adani Wilmar Ltd, after a planned share sale to global alternative investors, people aware of internal discussions said. The Indian infrastructure conglomerate, along with its foreign partner Wilmar International, will, however, maintain a majority 51 percent stake in the venture, they said.

While Adani Group has decided to cut its holding in the business as it looks to focus on its core infrastructure business, it still wants to have some control over Adani Wilmar, the people said, requesting anonymity.

Currently, promoters Adani Group and Wilmar own a combined 87.87 percent of Adani Wilmar. Established in 1999, Adani Group and Wilmar hold 43.97 percent each in the packaged foods joint venture that sells edible oil and other staples under the Fortune brand.

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In a statement to stock exchanges in December, the company said that its promoter entities would sell up to 1.24 percent of the total paid-up equity share capital of the company from December 26 till January 31 or the actual date of completion of the sale of all shares, whichever is earlier, in one or more tranches.

“A number of potential investors have been sounded off, and discussions are currently around valuation and quantum of stakes,” one of the people cited above said. “Those approached include Middle Eastern sovereign funds as well as US- and Australia-based private equity funds.“ It is not immediately clear if any of the transactions would lead to a mandatory open offer under Sebi takeover rules.

Emails requesting comments from spokespeople for Adani Group and Wilmar went unanswered as of Wednesday morning.

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“In the given situation, bringing in a strategic investor such as another FMCG company is not viable,” said a second person. “At the same time, offloading stake via block deals to regular market participants may not be an option either because traditionally the company has not attracted significant interest from domestic and foreign institutional investors”, the person added.

The latest market data showed that mutual funds retained their 0.06 per cent holdings in Adani Wilmar during the December quarter, with the number of schemes invested in the company rising from 17 to 19. On the other hand, foreign institutional investors marginally increased their stake to 0.65 percent in the quarter.

Adani Wilmar reported an 18 percent volume growth in the six months ended September 30 from a year earlier, led by improved consumer demand and lower edible oil prices. Revenues for the first half of the financial year, however, declined 13 percent due to a steep decline in edible oil prices.