Adani Total Gas‘s stock price rose by more than 6 percent on September 23 following the announcement that the company had secured a $375 million funding package from international lenders. This financial support is set to be the largest of its kind in the city gas distribution (CGD) sector globally.
The joint venture between India’s Adani Group and France’s TotalEnergies revealed that the funds will be used to expedite the development of Adani Total Gas’s network infrastructure. The initial investment of $315 million is flexible, with the potential for an increase in line with the company’s expansion plans, as detailed in a regulatory filing.
The financing round involved five major international banks: BNP Paribas, DBS Bank, Mizuho Bank, MUFG Bank, and Sumitomo Mitsui Banking Corporation. This capital will be used to speed up the company’s capital expenditure program, allowing for a swift expansion of its CGD network across 34 authorized geographical areas in 13 Indian states. This initiative aims to serve up to 14 percent of India’s population, which translates to over 200 million people. The expansion is expected to enhance the availability of piped natural gas (PNG) and compressed natural gas (CNG), fostering a gas-based economic ecosystem, according to Adani Gas.
Parag Parikh, CFO of Adani Gas, commented, “The involvement of global lenders highlights the significance of city gas distribution as a transitional fuel. This financial structure will support the sustained growth of Adani Total Gas and lay the groundwork for future funding in accordance with our capital management strategy, ensuring long-term value for all stakeholders.”
Legal representation for the transaction included Latham & Watkins LLP and Saraf & Partners acting as the borrower’s counsel, while Linklaters and Cyril Amarchand Mangaldas served as the lender’s counsel.
As of 9:19 am, shares of Adani Total Gas were trading 5.8 percent higher at Rs 835 on the National Stock Exchange (NSE). Over the past year, the stock has seen a 32 percent increase, surpassing the Nifty’s 27 percent return. However, the stock has experienced a 16 percent decline year-to-date, contrasting with the Nifty’s 19 percent rise during the same period.
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