India’s largest FDI deal in CGD: Total buys 37.4% stake in Adani Gas

New Delhi: India's largest Foreign Direct Investment (FDI) deal in the city gas distribution (CGD) sector was announced on Monday as French energy giant Total acquired a 37.4 percent stake in Adani Gas Ltd. The deal is valued at Rs 5,662 crores and gives Total joint control of Adani Gas, the company said in a statement on Monday.

Total, the world's second-largest liquefied natural gas company, will purchase 37.4 percent stake in Adani Gas through a tender offer to public shareholders to acquire up to 25.2 percent shares subject to applicable regulations and purchase the residual shares from the Adani family, the press statement said. This means that Adani family and Total will eventually hold 37.4 percent stake each and public shareholders will hold the remaining 25.
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2 percent.

Total, Adani Gas will jointly develop regasification terminals

The expanded partnership will develop regasification terminals, including Dhamra LNG, on the east coast of India, market liquefied natural gas (LNG) domestically, and through Adani Gas target to distribute gas to 7.5 percent of India's population, a statement said. This strengthens the partners' commitment to making big stride towards India's vision of promotion of natural gas and clean energy, it added.

Future plans

As part of the existing joint venture, Adani and Total in the coming years will also target to build a fuel retail network of 1,500 stations along highways and intercity connections.

Adani Gas will also set up 1,500 compressed natural gas (CNG) stations for gas distribution over the next 10 years in its and its joint venture's geographical areas in 71 districts, 68 towns spread across 15 states in India, the press release said.

The backdrop

Last year, Total had signed a memorandum of understanding (MoU) with the Adani Group to form a joint venture that would operate liquefied natural gas (LNG) regasification terminals at Mundra and Dhamra and roll out 1,500 fuel stations over a period of 10 years to tap the demand in the world's fastest-growing energy market. The Adani family currently owns a 74.8 percent stake in Adani Gas, which was listed on the stock market on November 5, 2018.

Buoyed by the news of the acquisition, shares of Adani Gas on Monday were trading at Rs 154.40 on BSE, up 12.2 percent from previous close. At current share prices, the deal works out to over Rs 5,000 crores.