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Adani to Buy PSP Projects Stake to Boost Construction Arm

Daily Equity - Adani to Buy PSP Projects Stake to Boost Construction Arm

Adani Group acquires a 30% stake in PSP Projects for ₹6.85 billion to strengthen its infrastructure capabilities. The deal includes an open offer, supporting India’s infrastructure growth and Adani’s strategic expansion.

In a significant move to expand its infrastructure footprint, the Adani Group, led by billionaire Gautam Adani, has agreed to acquire a majority stake in PSP Projects Ltd., a key player in India’s construction and engineering sector. This acquisition is valued at 6.85 billion rupees ($81.1 million) and is part of Adani Group’s broader strategy to strengthen its construction capabilities for executing large-scale infrastructure projects.

About PSP Projects
PSP Projects specializes in offering a diversified range of construction and allied services, including industrial, institutional, government, and residential projects across India. Its expertise in large-scale infrastructure development aligns perfectly with Adani Group’s broader goals of enhancing India’s infrastructure. This acquisition further supports Prime Minister Narendra Modi’s vision for a modernized India, underpinned by improved infrastructure.

Details about the acquisition
The transaction involves Adani Infra (India) Ltd., a subsidiary of the Adani Group, purchasing a 30.07% stake in PSP Projects from the company’s founders at 575 rupees per share. This represents a 14.43% discount from PSP Projects’ most recent closing price of 672 rupees, reflecting the Adani Group’s confidence in the company’s potential for future growth. The deal comes just weeks after the Adani Group announced the acquisition of ITD Cementation India Ltd., another key player in the construction sector.
The acquisition is also expected to include an open offer for an additional 26% stake at a price of 642.06 rupees per share, bringing the total investment in PSP Projects to 13.45 billion rupees ($162.2 million). Once completed, the Adani Group will gain joint control of PSP Projects alongside its current founders. Notably, the deal stipulates that neither the Adani Group nor the founders will be allowed to sell their shares in PSP Projects for the next five years.

A Bold Strategy for Infrastructure Dominance

The latest acquisition is part of Adani Group’s broader strategy to consolidate its position in India’s infrastructure sector, particularly in the construction and cement industries. Last month, Adani announced the purchase of ITD Cementation, further expanding its construction-related assets. Adani’s push into the cement market, along with these strategic acquisitions, reflects a direct response to the Indian government’s infrastructure push and the need for robust engineering capabilities.
With the Indian government’s focus on modernizing the country’s outdated infrastructure, Adani Group’s investments are well-timed. The government has committed substantial resources to developing India’s roads, railways, ports, and energy sectors, which are expected to drive demand for construction services and raw materials like cement.
Adani Group has also made it clear that the acquisition of PSP Projects is not merely about expanding its portfolio, but about enhancing its capacity to execute large-scale infrastructure projects, particularly in sectors such as roads, ports, and energy.

Recovering from the Hindenburg Impact

This acquisition comes on the heels of a difficult period for the Adani Group, which saw its market value plummet by more than $150 billion in early 2023 following allegations of stock price manipulation and fraud by short-seller Hindenburg Research. Despite the accusations, which Adani Group has consistently denied, the conglomerate has managed to weather the storm and bounce back, focusing on strategic acquisitions and investments to strengthen its core business.
The Adani Group’s resilience and recovery from the Hindenburg allegations signal its commitment to long-term growth and infrastructure development in India. The group’s renewed focus on acquisitions, such as the purchase of PSP Projects and ITD Cementation, demonstrates its determination to enhance its construction and engineering capabilities.

Way Ahead

By acquiring PSP Projects, Adani is bolstering its capabilities to deliver complex projects that are critical to India’s modernization efforts. The next few years will likely see continued expansion as the group enhances its engineering and construction expertise, while working alongside the Indian government to address the country’s infrastructure needs.
Adani Group’s acquisition of PSP Projects reflects the growing trend of consolidation in the Indian infrastructure sector, where large conglomerates are increasingly looking to expand their influence and capabilities through strategic acquisitions. This move is expected to further strengthen the group’s position in a rapidly growing economy that requires modern, efficient infrastructure to sustain its growth.

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