GCC investment in India’s Adani Enterprises’ green finance-focused secondary offering goes south

Good morning, ladies and gents. For our Egypt-based readers, we hope the long weekend treated you well, and for those elsewhere in the region, we hope you had a restful couple of days to gear up for the week. We have a lot of news to cover this morning, so let’s jump right in.

THE BIG CLIMATE STORY OUTSIDE THE REGION- Climate change-induced inclement weather hits New Zealand mid-summer: Auckland, New Zealand’s largest city and business hub, remained under a state of emergency yesterday after three days of severe rainfall, flash floods, and landslides battered “large swathes” of the country’s North Island. Rainfall reached record levels, with four people reported dead, thousands of properties left without power, and hundreds without water, according to authorities. Auckland Airport closed its international and domestic terminals from Friday evening to midday Saturday, forcing one Emirates flight from the UAE to turn around 13 hours into the trip. Climate change is causing more frequent and intense periods of rainfall in the antipodean nation, New Zealand’s Climate Change Minister James Shaw noted in a tweet on Saturday.

The story is seeing widespread coverage in the international press: Reuters | Guardian | BBC | CNN | ABC | New York Times | Voice of America | Euronews |

ALSO BIG OUTSIDE THE REGION, BUT WITH REGIONAL IMPLICATIONS- India’s Gautam Adani has clapped back at a report poised to derail his firm’s USD 2.5 bn secondary offering, intended to boost green financing. Adani published a 413-page document (pdf) yesterday, refuting allegations leveled at Adani Group of fraud and unsustainable debt — all of which were published on Tuesday in a report by investment research firm and short seller Hindenburg Research.

Investor interest in a planned secondary offering of shares in Adani Enterprises — a key Adani Group subsidiary — was notably muted when it kicked off last week, following the Hindenburg report’s disclosures. Adani had intended to use some USD 1.33 bn raised in the secondary offering to fund green hydrogen and other infrastructure projects, Bloomberg reported before the furore. We have more on the story in the news well, below.

Adani terms the publication of the Hindenburg report “nothing short of a calculated securities fraud under applicable law” in his rebuttal. The company has intimated it might take legal action against the research firm.

The story is seeing coverage in the international press: Reuters | Bloomberg | Reuters | Bloomberg | Financial Times | BBC

---

PSA- The French Development Agency (AFD) has opened applications for funding sustainable cities projects through its Samim project, according to a statement. AFD will provide financing ranging from EUR 30-40k for projects focusing on waste management, energy efficiency, sustainable mobility, ecotourism, ecourbanism, and ones bolstering the transition to clean energy across Morocco, Tunisia, and Jordan. Interested SMEs, startups, and young entrepreneurs from the three countries with projects that can be completed within 12 months can submit applications here until 20 February.

WATCH THIS SPACE- Oman has allocated land for renewables projects that will be used for green hydrogen and ammonia production within its special economic zones, Public Authority for Special Economic Zones and FreeZones (OPAZ) Chairman Ali Al Sunaidy said in an interview last week. OPAZ has allocated 250 sqkm within the Duqm economic zone for solar and wind farms to power green hydrogen and ammonia production, with one “initial 300 MW plant” already under construction and detailed studies underway for another of “much larger capacity,” Al Sunaidy said. OPAZ is also allocating land within the Sohar economic zone to boost solar energy production, he added. Plans to allocate the land were announced back in October.

Blue hydrogen could also be produced in Duqm: OPAZ is eyeing the possibility of producing blue hydrogen for export in Duqm, taking the captured CO2 and “re-injecting” it into decommissioned oil and gas fields nearby, Al Sunaidy said.

SIGN OF THE TIMES- Is the tide turning on fossil fuel investments? Global green investments were on par with fossil fuel investments for the first time in 2022, with USD 1 tn channeled into the clean energy transition last year, according to analysis from BloombergNEF. This is the first time investments in renewables, electric vehicles and new energy sources have exceeded USD 1 tn, increasing 31% y-o-y from 2021. Almost half of energy transition investments — USD 546 bn — were made in China, with the US taking second place with investments totaling USD 141 bn. The biggest share of investments by project type went toward wind and solar, with EVs coming in close behind.

Get Enterprise Climate

***
YOU’RE READING ENTERPRISE CLIMATE, the essential MENA publication for senior execs who care about the world’s most important industry. We’re out Monday through Thursday at 4am Cairo / 5am Riyadh / 6am UAE.

Were you forwarded this email? Get your own subscription without charge here or reach out to us on climate@enterprisemea.com with comments, suggestions and story tips.

***

---

CLIMATE DIPLOMACY-

Egypt’s El Sisi puts green energy in the spotlight on state visit to India: Egyptian President Abdel Fattah El Sisi discussed stronger renewables collaboration during talks with Indian Prime Minister Narendra Modi and held green energy-focused discussions with the leaders of India’s ReNew Power and Adani Group during his visit to India last week, according to multiple statements (here, here and here). No new investment or economic agreements have been announced following El Sisi’s three-day visit.

El Sisi also discussed renewables with Azerbaijan: El Sisi met with Azerbaijani counterpart Ilham Aliyev to discuss cooperation on renewable energy and Egypt’s renewables and hydrogen generation capacity on his first state visit to the country, according to a cabinet statement on Friday. The president also discussed private sector cooperation and investments with the country’s industry leaders, another statement notes, without disclosing any specific projects.

Egypt’s Electricity Ministry signed an MoU with Nigeria’s Energy Ministry to boost renewable energy cooperation, according to a cabinet statement released last week. The agreement will target cooperation on planning, design, and implementation of renewable energy projects and expand on training and capacity building activities for energy production in both countries.

---

CIRCLE YOUR CALENDAR-

EBRD + EU + GCF green finance event in Egypt: The European Bank for Reconstruction and Development (EBRD), the EU, and the Green Climate Fund will hold a green finance event tomorrow at the Nile Ritz Carlton Hotel in Cairo, Egypt.

Egypt will host the CSR Forum from 2-5 March at Somabay, Hurghada. The event aims to further discussions put forth during COP27 and boost private and public sector cooperation on climate action. You can register for the event here.

The Arabia CSR Awards is accepting applications until Friday, 30 June. The awardwinners will be announced during a ceremony on Wednesday, 4 October.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

Strong GCC investor interest in India’s Adani Enterprises is at risk: While GCC investors had been eyeing bids for the INR 200 bn (USD 2.45 bn) secondary offering of India’s Adani Group subsidiary Adani Enterprises — which kicked off last Wednesday — a report published last week by Hindenburg Research has led the company’s share price to tumble and could put the offering at risk, Reuters reports. Adani had intended to use some INR 108.69 bn (USD 1.33 bn) from the secondary offering to fund green hydrogen projects, along with airport facilities and greenfield expressways, Bloomberg reported last week.

Which regional players bought in so far? UAE sovereign wealth fund Abu Dhabi Investment Authority (ADIA) and other anchor investors bid for shares worth some INR 90 bn (USD 1.10 bn), making the INR 60 bn anchor portion of the offering 1.5x oversubscribed, Reuters reported on Wednesday. Bloomberg suggested the anchor book’s oversubscription rate had hit 1.8-2x. Among the anchor investors, interested parties included Abu Dhabi-headquartered corporate investment holding firm International Holding Company (IHC), UAE sovereign wealth fund Mubadala, and French international banking group BNP Paribas SA. IHC had reportedly bid for some USD 200 mn worth of shares, while the other anchor investors had placed bids ranging from USD 25-50 mn, Bloomberg’s Wednesday run-down noted. ADIA was allocated 2.56% of the 18.2 mn shares reserved for institutional investors — worth INR 1.53 bn (USD 18.8 mn).

But then shareholder appetite plummeted over the weekend: As retail bidding started on Friday, the issue was only around 1% subscribed, Reuters noted. Investors had bid for some 470k of the 45.5 mn shares on offer, the newswire added. Adani Enterprises’ stock ended the day at INR 2,761 per share — well below the sale’s INR 3,112/share floor price.

So, will the offering continue as planned? We may find out today: The secondary offering remains on track and will continue on schedule at the planned issue price, Adani Group told Reuters on Saturday. This followed reports by unnamed sources that bankers were mulling an extension of the sale by four days or cutting the issue price by as much as 10%. Bidding for anchor and retail investors is set to close tomorrow.

Why is this important? Adani Group has been on a renewables push: Adani Group pledged to invest USD 50-70 bn in the next decade across “the entire green energy value chain,” the Press Trust of India reported (pdf) in October. Adani Green Energy — the renewables branch of Adani Group — raised USD 750 mn in green bond issuances and announced a USD 200 mn JPY-denominated refinancing facility in 2022, the Financial Times noted. Adani New Industries (ANIL) — a utility company focused on renewables projects — is targeting production of 1 mn metric tons of green hydrogen by 2030. TotalEnergies, which holds a 25% stake in ANIL and a 20% stake in Adani Green Energy, is partnering with ANIL to build a green ammonia facility serving the Indian market.

And eyeing green hydrogen production in MENA: Adani Group was said to be exploring the feasibility of hydrogen production in Morocco and Oman in November, having previously indicated it could invest in 10 GW of renewables projects in Morocco to supply green ammonia. The group recently signed an agreement with Australia’s Cavendish Renewable Technology (CRT) for CRT’s electrolyzer technologies, as part of a plan to develop hydrogen tech to meet demands in MENA and India.

But some have accused Adani of raising money under the guise of a renewables push, only to fund polluting businesses. Investing in Adani’s renewables activity ultimately funds the growth of the group’s fossil fuel-based businesses, despite Adani’s claims that the subsidiaries have different mandates, Climate Energy Finance director Tim Buckley is quoted by the FT as saying.

PIF may be mulling an acquisition of EV maker Lucid Group: Market speculation that Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), wants to fully acquire US-headquartered EV maker Lucid Group saw the company’s shares surge some 43% on Friday, Reuters reports. PIF already holds a majority stake of over 65% in the firm, the outlet added.

Is talk of an acquisition just a lot of hot air? Speculation that an acquisition was in the offing is effectively “market gossip” attributed to Betaville, an independent website covering M&A and other agreements, Reuters noted. One long-short fund manager told Reuters that the fund shorted Lucid amid Friday’s share spike, based on the belief that the spike “was solely based on rumors,” the outlet added.

PIF has already invested heavily in Lucid: PIF invested over USD 1 bn in Lucid Motors — the brand name of Lucid Group — in 2018, and construction of the company’s Saudi Arabia production plant began in May 2022. 80% of all EVs produced by Lucid will be made in Saudi Arabia by 2030 with 155k EVs produced annually in the Kingdom by 2025, Lucid’s Vice President for MENA, Faisal Sultan, told Asharq Business in October.

This is part of KSA’s bigger EV push: Saudi Arabia’s first EV company, Ceer — a JV between PIF and Taiwan’s Foxconn Technology Group — secured a site for its USD 96 mn EV factory in the King Abdullah Economic Center in November, with plans to sell EVs in Saudi Arabia by 2025. And Dubai’s Admiral Mobility will bring some 5k commercial vehicles to Saudi Arabia and the UAE this year and next, we noted in December. In 2018, PIF was interested in taking US EV and clean energy firm Tesla private, but no agreement was reached, Reuters noted.

Iraq and France have inked agreements as part of a strategic roadmap to expand cooperation in renewable energy among other sectors, according to a statement released on Friday. Iraqi Prime Minister Mohammed Shia al-Sudani and French President Emmanuel Macron met in Paris on Thursday to discuss expanding cooperation in energy and public transportation, among other sectors, the statement said.

Strengthening ties: France organized the Baghdad Conference for Cooperation and Partnership — the second of its kind — in Jordan last month to provide international support to the country in terms of security, economic integration, and stability, the Saudi Gazette quoted Jordan’s King Abdullah II as saying.

Iraq needs USD bns to boost green growth: Baghdad faces desertification, food insecurity, and systemic central power network failures, as well as geopolitical obstacles hindering its development. Iraq needs some USD 233 bn additional investment by 2040 to pursue its green growth path, according to a World Bank report (pdf). The country must diversify its oil-reliant economy in the face of climate change-driven challenges, the report said.

Some moves have been made: Several Chinese companies submitted proposals to develop wind and solar facilities in the country last month. Iraq’s Environment Ministry and National Investment Commission are also preparing a new solid waste-to-energy law to attract investments.

And other unspecified ventures: The Iraqi government approved a plan earlier this month to establish a USD 3 bn unspecified energy facility that would more than quadruple the southern governorate of Dhi Qar’s generation capacity to 3.85 GW from 850 MW.

France is also interested in cooperation on renewables: The Elysée wants to enhance cooperation with the kingdom in the field of renewable energy and hydrogen, French Finance Minister Bruno Le Maire told Al Arabiya yesterday. The minister also signaled interest in attracting more investments from Saudi companies in France.

IN OTHER NEWS- Qatar might be eyeing a stake in Iraqi energy projects: QatarEnergy could acquire a 30% stake in a USD 27 bn cluster of energy projects in Iraq owned by France’s TotalEnergies, Reuters reports, citing unnamed sources with knowledge of the matter. The agreement reportedly includes the development of a 1 GW photovoltaic power plant, according to RFI.

Algeria partners on hydrogen production in Italy: Algerian state-owned energy firm Sonatrach and South Africa’s petrochemicals company Sasol will establish low-carbon hydrogen production and synthetic gas generation plants equipped with carbon capture and storage tech in Sicily, according to a statement by Sasol. The timeline and financials of the projects were not disclosed.

The details: The plant will generate some 7.8k tons of low carbon hydrogen produced with renewable energy and some 25k tons of synthetic gas annually, the company notes. Details on the renewable energy projects used to generate the low carbon hydrogen have not been disclosed.

And how much carbon are they capturing? The plants are expected to enable both companies to sequester some 120k tons of CO2 per annum, with plans on repurposing the energy source for future use, Sasol’s statement says.

Sonatrach has been busy lately: Sonatrach signed two agreements with Italian multinational energy company Eni to reduce greenhouse gas and methane emissions, increase energy efficiency, and develop renewable energy projects including green hydrogen and carbon capture and storage, according to a statement. Eni and Sonatrach will also undertake studies to see how Algeria’s energy export to Europe could be improved.

Saudi’s Ma’aden signed an MoU with US-based AI robotic mining company Offworld to explore zero-carbon mining in the kingdom, according to a press release published on Friday. The agreement will allow Ma’aden to use robotic mining swarms that eliminate mining’s carbon footprint and the need for human miners.

How does it work? Offworld’s smart robot swarms aim to innovate mining, processing, manufacturing, and construction with five types of robots covering a range of functions including surveying, excavating, collecting, hauling, and bulldozing, according to their website.

Why this is important: The World Bank has warned that minimizing the climate footprint of mineral extraction — which runs the risk of exacerbating water scarcity and significantly increasing emissions — is key as demand for energy-transition minerals increases.

---

Tunisia issues tenders for 16 renewables projects worth 1.4 GW: Tunisia is inviting bids for solar and wind energy projects in the country over the next two years, according to a government statement. Eight solar power plants — each with a generation capacity of 100 MW — and eight wind energy farms with a generation capacity of 75 MW each are on offer. The first round of bidding for the solar plants closes on 15 June, while the deadline to submit bids for the wind projects is 14 September.

KSA ramping carbon capture research: Saudi Arabia’s state-owned Saline Water Conversion Corporation (SWCC) has signed a cooperation agreement with Korean CarbonCo for joint research across various carbon capture projects across the kingdom, Trade Arabia reports. The two partners will work together to adopt carbon capture utilization and storage (CCUS) technology to absorb carbon from power plants run by SWCC and use it in the seawater desalination post-treatment procedure. No financial details were disclosed.

Masdar-led consortium ramps up SAF production certifications: A consortium of UAE’s renewables firm Masdar, Siemens Energy, Marubeni, and TotalEnergies announced last week that it is working to obtain licenses to certify the production of sustainable aviation fuel (SAF) from methanol gas, according to a company statement. The consortium has worked with regulators to complete technology supplier assessments, feasibility studies, and designs since 2021, the statement notes

And others are helping: The Masdar-led consortium will work with the Abu Dhabi Department of Energy, Lufthansa, Khalifa University of Science and Technology, and Emirates Airways will launch a pilot project to produce SAF and green aviation fuel, the statement notes.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• US-based EV manufacturer Canoo signed an exclusive distribution agreement with KSA’s GCC Olayan for the sale, service maintenance, and repair of Canoo EVs in Saudi Arabia. Both companies are also eyeing the construction of a local assembly plant in the kingdom. (Statement)
• UAE state-owned aluminum manufacturer Emirates Global Aluminium provided over 200k tons of waste feedstock to various industries across the country in 2022. (Statement)
• Egypt’s state-owned Misr Chemical Industries has tapped gas company Gulf Cryo and engineering firm Ecces for a hydrogen exploitation project under a build, own, operate contract. (EGX statement)
• Emerge — a JV between Masdar and France’s EDF — signed an agreement with UAE bottler and distributor Coca-Cola Al Ahlia for a 1.8 MW solar plant in Al Ain. The turnkey project — operated and maintained by Emerge for 25 years — will include ground-mounted, rooftop and car park installations. (Statement)

Growth in commercial seaweed farming could have profound benefits to land use, emissions reduction, water and fertilizer use, the Guardian reports, citing a study led by the University of Queensland. The study found that the inclusion of seaweed as 10% of human diets globally by 2050 would sufficiently reduce the amount of land needed for food by an area twice the size of France.

Where does our region stand? While seaweed cultivation and bioprocessing is still scarce in MENA and GCC areas — valued at nominal USD 28.9 mn in 2022 — Tunis made strides increasing its red seaweed harvest operations in 2021. Further afield, Africa is also eying potential growth in the seaweed production, with one study highlighting the continent’s unlocked potential given its position as the third-largest producer of red seaweed.

Why is this important? Seaweed production does not require arable lands, irrigation, or fertilizers, according to a 2021 study on benefits of seaweed farming in Tunisia, making it a climate-friendly food industry for regional countries battling water scarcity.