MC Exclusive | Adani clinches Holcim deal with speed and tackling FEMA rules

Adani Group Chairman Gautam Adani. File image

Billionaire Gautam Adani, known for building an empire in every vertical that his group enters, successfully pipped rivals in clinching Holcim’s cement assets in India and became the second-largest cement manufacturer in India after Aditya Birla Group’s UltraTech.

Adani travelled to Geneva to stitch the deal tailored to Holcim’s requirements, people with direct knowledge of the matter said.

Holcim wanted deal certainty with speed and structuring the transaction outside the purview of India’s foreign exchange regulations, which Moneycontrol was the first to report, turned out to be one of the biggest factors in finalising the winning candidate, the people said.

The Adani family signed the definitive agreement with Holcim through an overseas special purpose vehicle, enabling it to skip the Foreign Exchange Management Act (FEMA) regulations because there is no repatriation to the foreign promoter of Ambuja Cements.

The Adani Group will acquire Holcim’s business in India, comprising its 63.11 percent stake in Ambuja Cements, which owns a 50.05 percent interest in ACC, as well as its 4.48 percent stake in ACC in a $10.5 billion deal.

“Market valuations are dropping fast in a changed macro-environment and FEMA guidelines would have required the deal at a value that the stock market prescribes, which would have been a concern for Holcim if the deal got delayed due to regulatory approvals,” the people pointed out.

The Foreign Exchange Management (Non-debt Instruments) Rules, 2019, state that price guidelines of the Securities and Exchange Board of India will be followed in specific transactions regarding listed companies.

The people aware of the developments indicated that there will be no involvement of any listed company or vehicle in India for this transaction.

The Adani Group has appointed ICICI Securities to conduct the open offers for additional shares of Ambuja Cements and ACC as required. The group intends to keep both entities listed for now and is not looking at delisting them. ACC and Ambuja are likely to operate as separate brands.

The deal, which concluded late May 15 night, came as a shock to other bidders in the race for Holcim’s assets, several people told Moneycontrol. The industry is now bracing for the Adani Group’s aggressive expansion in the cement industry and doesn't rule out the potential for more consolidation.

AZB is said to have advised Holcim and Cyril Amarchand Mangaldas advised Adani Group on the deal. StanChart, Barclays & Deutsche Bank arranged the funds for Adani.

Holcim and the Adani Group did not comment on any deal-related queries sent by Moneycontrol.