After Vedanta, Adani Power to go for delisting; board meet on June 3

The conglomerate has so far maintained a strategy to incubate a business and monetize it through public listing at a later stage.

The Adani group wants to delist Adani Power, whose board will meet on June 3 to consider the proposal.

If approved, this will be the first time billionaire Gautam Adani will de-list a business.

Adani Power on Friday informed the exchanges it had received a delisting proposal from Adani Properties, which is a member of the promoter and promoter group. In the letter Adani Properties expressed the intention “to either by itself or together with other members of the promoter group acquire all the equity shares of the company”. With this, Adani Power is the second company to announce a delisting this month. On May 12, Anil Agarwal-led Vedanta said the company would voluntarily delist from the BSE and National Stock Exchange.

Vedanta said the move was to further simplify the corporate structure and service debt better.

The Adani group so far has maintained a strategy to incubate a business and monetise it through public listing later. Listed in 2009, Adani Power was one of the early public listing offerings from the conglomerate. In 2015, Adani Enterprises announced a business restructuring plan, by which its ports and power business was merged with Adani Ports and SEZ and Adani Power, respectively, and the transmission business was listed separately.

In its letter to Adani Power’s board, the promoter said the delisting would enable the group to obtain full ownership, and provide enhanced operational and strategic flexibility. The promoters in the letter added the delisting would also allow flexibility for “options like corporate restructurings, acquisitions, exploring new financing structures including financial support from the promoter”.

Some analysts, however, do not accept the delisting rationale.

“The promoters already have enough control of the company. It sends a wrong message to shareholders of other listed entities of the group,” said an analyst.

The promoter and promoter group own 74.97 per cent of the voting rights in Adani Power.

Adani Gas, Adani Transmission, Adani Ports and SEZ, Adani Green Energy, and Adani Enterprises are the other listed companies of the conglomerate.

“Many of these cases (of proposed delisting) may be due to the prevailing market price, which is half the book. The promoters may be seeing an opportunity in delisting and bringing it back after a couple of years,” said a senior industry expert.