UAE’s IHC gives Adani Enterprises’ secondary offering a shot in the arm

Good morning, wonderful people. We have news across a spectrum of industries and countries today, so buckle up.

THE BIG CLIMATE STORY- The Adani Enterprises secondary offering saga continues with share prices sinking amid threats of taking the issue to court — but UAE corporate investment holding firm International Holding Company has thrown Adani Enterprises’ secondary offering a lifeline, saying it will invest USD 400 mn in the sale. We have chapter and verse in the news well below.

THE BIG CLIMATE STORY OUTSIDE THE REGION- The Russia-Ukraine war is likely to spur the global shift to renewable energy and low-carbon power, with governments accelerating domestic energy production — in areas including nuclear, renewables and hydropower — amid a surge in energy prices, oil giant BP said in its 2023 Energy Outlook (pdf), published yesterday. BP lowered its 2035 demand forecast for oil by 5% and gas by 6% under its central forecast scenario, compared to its outlook from 2022. This scenario would see 2030 carbon emissions standing 3.7% lower than in BP’s 2022 forecast.

The story is getting digital ink in the international press: Bloomberg | Financial Times | Reuters | Guardian

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WATCH THIS SPACE #1- SolarizEgypt is looking to invest USD 100 mn in Egypt over the next three years, as the company looks to increase business volume and build up FX stocks, CEO Yaseen Abdel Ghaffar reportedly told Al Mal. The Egyptian company, which installs and operates solar power plants around the country, could also expand its presence in Africa. The company is interested in entering Kenya, Tanzania, and South Africa, Abdel Ghaffar is quoted as saying.

WATCH THIS SPACE #2- UAE-France renewables cooperation likely to increase: The UAE and France are seeking to boost their economic relationship in the near future, France’s Finance Minister Bruno Le Maire said on the sidelines of the first Franco-Emirati business council meeting yesterday, Reuters reports. Energy is likely to be a key focus, following a strategic agreement signed last year that includes a pledge to cooperate on hydrogen and renewable and nuclear energy.

WATCH THIS SPACE #3- Emirates Airways has completed the MENA region’s first demonstration flight using 100% sustainable aviation fuel (SAF), Wam reports. The flight departed from Dubai International Airport and lasted over an hour, paving the way towards SAF certification as a viable green fuel for air traffic. Current certification standards only allow for a 50-50 blend of SAFs and conventional fuel. The flight comes a week after the airline successfully completed ground engine testing using 100% sustainable aviation fuel.

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HAPPENING TODAY- The European Bank for Reconstruction and Development (EBRD), the EU, and the Green Climate Fund are hosting an event on green finance in Cairo. The event will introduce the EBRD’s strategies for supporting Egypt’s green transition and panels will cover the potential and challenges of building climate resilience in the financial sector. Speakers will include Egyptian International Cooperation Minister Rania Al-Mashat and Egyptian Environment Minister Yasmine Fouad. Read tomorrow’s Enterprise Climate for our coverage of this event.

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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.

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Abu Dhabi’s IHC confirms investment in Adani Group: Abu Dhabi-headquartered corporate investment holding firm International Holding Company (IHC) intends to invest USD 400 mn in the USD 2.45 bn (INR 200 bn) secondary offering of India’s Adani Group subsidiary Adani Enterprises, it announced in a statement. Bloomberg had previously reported that IHC had bid for some USD 200 mn worth of shares — suggesting the firm has invested double what was anticipated.

The IHC funding represents about 16% of Adani Enterprises’ secondary offering, Bloomberg notes. The investment is being made through IHC’s subsidiary, Green Transmission Investment Holding, as part of a company strategy to increase its global acquisition activities by 70% in 2023, IHC’s statement says. Last year, IHC invested some USD 2 bn in Adani Group’s green portfolio.

It joins several other anchor investors: 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) late last week, making the INR 60 bn anchor portion of the offering 1.5x oversubscribed. ADIA was allocated 2.56% of the 18.2 mn shares reserved for institutional investors — worth INR 1.53 bn (USD 18.8 mn). Other investors include Maybank Securities and Life Ins. Corporation of India.

The secondary offering hasn’t panned out as hoped: Bloomberg had anticipated an oversubscription rate of 1.8-2x for the offering’s anchor book in a run-down published on Wednesday, when bidding kicked off. But Tuesday’s publication of a report by investment research firm and short seller Hindenburg Research, which leveled allegations of fraud and unsustainable debt at Adani Group, appears to have weakened investor appetite. Data gathered by Reuters yesterday indicated Adani had received bids for 1.4 mn shares — just over 3% of the 45.5 mn shares on offer in the retail portion of the sale.

And Adani Group’s share prices tanked with bns in losses: Share prices in most Adani Group firms fell sharply yesterday, with total losses for the group adding up to some USD 65 bn, Reuters noted. Adani Enterprises’ stock closed yesterday at INR 2,892/ share — some 7% below the sale’s INR 3,112/share floor price, the newswire added.

So could the secondary offering be scrapped? Bidding for anchor and retail investors is set to close today. Indian regulations say the offering must receive a minimum subscription of 90% — or else the issuer has to refund the full amount of investment, Reuters noted yesterday. The sale would continue on schedule at the planned issue price, Adani Group told Reuters on Saturday — despite reports from unnamed sources that bankers were mulling an extension of the timeline or cutting the issue price.

Raising money for green projects is a focal point of the secondary offering, amid Adani’s overall renewables push: 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 other areas of infrastructure, Bloomberg reported last week. This follows Adani Group’s pledge in October (pdf) to invest USD 50-70 bn over the next decade across “the entire green energy value chain.”

Luxembourg-headquartered mining and raw materials supplier Eurasian Resources Group (ERG) will invest USD 50 mn in Saudi Arabia’s mining sector, according to a statement released last week, with plans for further long-term investments. No time frames were disclosed in the statement.

The details: ERG is planning large scale and tech driven, early-stage exploration for battery transition materials in KSA’s Dawadmi region, according to the statement. The company has already secured licenses to explore this area and is now seeking further exploration prospects, it adds. ERG is a producer of copper and cobalt, according to the company website.

Industry partnerships are also in the pipeline: ERG signed an MoU with Saudi mining company Ma’aden to build a tech hub to research ways of boosting mineral exploration efficiency in the Kingdom, the statement notes.

ERG is taking the first step into a regional expansion: ERG will set up two offices in KSA — one in Riyadh and the other in Jeddah — with its presence on the ground serving as a springboard for the company’s growth in MENA, according to the statement.

And it’s a W for KSA’s minerals push: The kingdom is on a push to position itself as a global hub for “green metals” and ERG intends to capitalize on incentives under the Kingdom’s Mining Investment Act to support its activity, ERG Board Chairman Alexander Machkevitch was quoted as saying, without providing further details. The Kingdom says it has untapped metals and minerals — including copper, zinc, phosphate, and gold — collectively worth USD 1.3 tn. It plans to attract some USD 32 bn in investment in its mining and mineral sector and award more than a dozen mining exploration licenses to international investors, Saudi Mining Minister Bandar Al Khorayef said in November.

This is the latest in a string of mining agreements this month: Ma’aden announced multiple joint ventures during the Future Minerals Forum to spur mining exploration both at home and abroad earlier this month. Other agreements announced at the forum included one that could see more British mining companies set up in KSA and agreements to build a lithium processing plant and a production plant for essential EV battery chemicals.

ELSEWHERE IN THE REGION- Oman is jumping on the bandwagon: Oman’s Environment Authority inked a technical cooperation agreement with Minerals Development Oman to develop a government services portal to facilitate procedures for the issuance of licenses for mining industry investors, Oman Observer reports. The new portal will simplify procedures for the submission of project-related environmental studies, allowing authorities to review requirements within two weeks. The country’s energy and minerals ministry invited bids for three mining sites to attract investment in the sector last October.

Abdul Latif Jameel Energy’s FRV adds more UK battery storage projects to portfolio: Spain-headquartered Fotowatio Renewable Ventures (FRV) reached financial close on two battery energy storage (BESS) facilities in the UK with a combined power output of 133 MW, according to a company statement. FRV — a subsidiary of Saudi solar PV developer Abdul Latif Jameel Energy and Environmental Services — separately acquired two British BESS projects with a combined capacity of up to 100 MW from UK utility scale solar and battery project developer RE Projects Development last October.

The details: One of the BESS facilities will have a power capacity of 99 MW and is set to be the UK’s largest BESS unit once operational, according to the statement. The other storage plant will have an output volume of 34 MW. The timeline of the facilities’ construction has not been disclosed.

Who’s footing the bill? FRV raised a total of USD 75 mn — 60% of the projects’ cost — to fund both battery storage units from investment banking firm Natixis CIB UK.

FRV’s global renewables shopping spree seems to be continuing in 2023: FRV also reached financial close on its 300 MWac Walla Walla solar farm in New South Wales, and acquired a majority stake in Greek renewables company Wootis SA’s 600 MW BESS project for an undisclosed sum earlier in November. The company also invested EUR 10 mn German solar-as-a-service provider Ecoligo in a Series A round in October, fueling Ecoligo’s expansion of its operations — including financing, planning, construction, and maintenance of solar projects.

Toyota will begin producing hybrid and plug-in hybrid versions of the Toyota C-HR and build a battery production line at one of its plants in Turkey, according to a company statement. The automaker will invest EUR 317 mn in the battery production line, the statement says, without specifying the cost of producing the hybrid and plug-in hybrid cars. This marks the first time the Japanese carmaker will produce plug-in hybrids and batteries in Turkey.

Enterprise, what’s the difference between hybrid and plug-in hybrids? All hybrid vehicles use a combination of gasoline and electric motors, but conventional hybrids don’t require a plug because their small batteries can be charged while you’re driving through their gasoline engines. Plug-in hybrids have larger batteries that can be charged up and driven for longer periods compared to a conventional hybrid model.

The details: It is unclear how many cars the plant will produce per year or the timeline for the beginning of production, but the company expects to produce 75k batteries annually at the Toyota Motor Manufacturing Turkey facility, with assembly set to begin in December 2023.

Ford also has battery production aspirations in Turkey: Ford is in talks to launch a Turkish battery plant with an annual production capacity ranging between 30 to 45 GWh, according to an original agreement last year between Ford, SK On, and Turkish Koc Holding. The plant is expected to come online in 2025.

IN OTHER EV NEWS- Israeli startup City Transformer will begin producing 15k electric vehicles annually in an undisclosed Western European country by the end of 2024, CEO Asaf Formoza tells Reuters. City Transformer will look to drum up an additional USD 50 mn in a series B round to ramp up production of its small urban CT-2 model.

Saudi Arabia has connected 700 MW of renewables-generated power to the national grid in its northern Al Jouf province, Okaz reports. KSA’s first wind farm — generating 400 MW of power — and the 300 MW Sakaka solar plant have a combined capacity of 700 MW. An additional 600 MW are under development in the 200 MW Qurrayat Solar PV Park — which is expected to come online next year — and the 400 MW Tabarjal PV plant.