Gautam Adani-led port-to-power conglomerate Adani Group is preparing to raise nearly $1 billion in 2021 through an initial public offering (IPO) by Adani Wilmer, people familiar with the ongoing discussions told Moneycontrol.
Adani Wilmar, which aims to be the largest food company in India by 2027, is trying to muscle its way in the fast-growing consumer segment and unlock value through the IPO. If the plans fructify, it will be the seventh firm to be listed from the diversified group’s stable.
“Adani Wilmar has attained considerable size and scale and has a good, diversified portfolio of products. As of now, it is planning to raise between Rs 7,000 crore and Rs 7,500 crore via the listing, though this is not final and the size may vary at a later stage,” said one of the persons cited above.
The firm, which makes popular edible oil brand ‘Fortune’, was set up in 1999 as a joint venture between the Adani Group and Singapore-based Wilmar, Asia’s leading agri-business group. It has diversified into other segments such as basmati rice, atta, maida, sooji, rawa, pulses and besan.
“Most of the Adani Group business are infra-related. It’s a good opportunity now to showcase their consumer business. They plan to value Adani Wilmar between $8 billion to $9 billion,” a second person told Moneycontrol.
A third person said in September 2020, Wilmar’s China unit raised $2.8 billion through an IPO amid hot demand. "The Adani Wilmar IPO is likely to be a combination of primary and secondary issue of shares.”
A fourth person told Moneycontrol that investment banks JP Morgan and Kotak Mahindra were selected earlier, but now BofA Securities and Credit Suisse are also on board. "Work has begun and depending on market conditions, the DRHP ( draft red herring prospectus) may be filed with market regulator Sebi by late June or in July.”
“Edible oil prices have gone up sharply in the last year during COVID-19 thereby benefiting all players in this segment. So from a timing perspective, this IPO makes sense,” said a fifth person who closely tracks the consumer sector.
In the edible oil segment, Adani Wilmar competes with brands such as Nature Fresh, Gemini and Sweekar backed by Cargill, Saffola owned by Marico, Sundrop by Agro Tech Foods, Dhara by Mother Dairy and others owned by Emami Group and Patanjali.
All the five persons cited above spoke to Moneycontrol on the condition of anonymity.
Moneycontrol is awaiting the response to an email query sent to the Adani Group and has sent reminders. This article will be updated as soon as we hear from the firm.
Credit Suisse declined to comment while Kotak Mahindra Capital, JP Morgan and BofA Securites had not responded at the time of publishing this article.
Adani Wilmar is not the only player in the edible oil segment planning a 2021 debut on Dalal Street. Gemini Edibles, a prominent player down south and the Indian arm of Golden Agri-Resources, the world's second-largest palm oil plantation company, also plans to launch an IPO and raise Rs 1,500 crore to Rs 1,800 crore. It is backed by private equity firm Proterra Investment Partners as well.
The combined m-cap of the six listed Adani Group entities had recently eclipsed the $100 bn mark. They include Adani Enterprises, Adani Ports and Special Economic Zones, Adani Transmission, Adani Power, Adani Total Gas and Adani Green Energy.
THE EDIBLE OIL FOOTPRINT
According to its website, Adani Wilmar has the largest distribution network among all branded edible oil players in India, with 85 stock points, 5,000 distributors and a 10 percent retail penetration which spans across approximately 1.5 million outlets all over the country. It has introduced value added health oils like Rice Bran and Vivo and its edible oil brand Rupchanda is the market leader in Bangladesh where the firm owns and operates two large refineries.
The joint venture owns 22 units that cumulatively translate to a refining capacity of over 16,800 tonnes per day and a seed crushing capacity of 8,800 tonnes per day. It has the largest range of edible oils spanning across the categories of soya, sun, mustard, rice bran, groundnut, cottonseed and the company has extended its range with the introduction of functional oils Xpert ProSugar Conscious & Xpert ProImmunity Oils which help in managing blood sugar levels and boost immunity.
ADANI WILMAR: THE REST OF THE BOUQUET OF PRODUCTS
As mentioned earlier, the firm is present in segments such as basmati rice, atta, maida, sooji, rawa, pulses and besan. It has also forayed into ready- to-cook khichdi and sugar and has launched Soya Chunkies, a healthy snack. It also caters to institutional demand through its industry essential range which includes bulk packs of consumer essentials as well as lauric & bakery fats, castor oil derivatives, oleo chemicals and soya value added products.
The oleo chemical plant at Mundra gives an output of 400 tonnes per day and it is one of the largest single location facilities in India. Fatty acids, stearic acids, soap noodles and refined glycerine are also part of the portfolio. The firm has a combined processing capacity of 1200 million tonnes of castor seeds per day with solvent and refining units.
Adani Wilmar exports branded edible oil including lecithin, castor & soya value added products to more than 19 countries in the Middle-East, South East Asia & East Africa including Singapore, Australia & New Zealand.
That’s not all, the firm is also present in the personal and skin care category with brands like Alife Soap. It has made a recent entry in the hand wash and hand sanitiser segment . The consolidated product portfolio of Adani Wilmar includes the following brands - Fortune, King’s, Bullet, Raag, Avsar, Pilaf, Jubilee, Fryola, Alpha, Alife and Aadhar.
In November 2020, post the completion of 20 years of its flagship ‘Fortune’ brand, Adani Wilmar Deputy CEO Angshu Mallick had said the company’s revenue is in excess of Rs 30,000 crore, of which edible oil business contributes around Rs 24,000 crore. He had also added that the company will continue to have double-digit growth and that the share of food business in the overall turnover would rise gradually.