Adani’s Wealth Surge in 8 Months

Bloomberg News

Adani’s $4.1 Billion Wealth Surge in 8 Months Fuels Attacks

By Kartikay Mehrotra and Jack Witzig May 06, 2014

      

Gautam Adani

Gautam Adani, chairman of Adani Enterprises Ltd. Photographer: Adeel Halim/Bloomberg.

Indian billionaire Gautam Adani’s wealth has tripled since Narendra Modi became the top opposition party’s prime minister pick eight months ago, fueling campaign attacks over the Gujarat chief minister’s plans to bolster Asia’s third-biggest economy.

Adani, a 51-year-old native of Gujarat state, has seen his fortune triple to $6 billion as of May 2 from $1.9 billion on Sept. 13, according to the Bloomberg Billionaires Index, equivalent to $25 million per day in a nation where some 800 million people live on less than $2. The surge has spurred criticism from ruling party campaign chief Rahul Gandhi, who says it shows that Modi’s policies will benefit the rich at the expense of India’s poor.

The attacks highlight the type of opposition Modi would face as India’s leader to any business-friendly moves aimed at reviving economic growth from the lowest in a decade. Modi improved access to electricity, built more roads and eased investment approvals after taking power in Gujarat in 2001, providing a platform for growth for companies in the state such as Adani Enterprises Ltd. (ADE)

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“The political fallout of these relationships really depends on the strength of his political opposition should Modi come to power,” said Nikita Sud, an associate professor of development studies at the University of Oxford, who wrote a book on Gujarat. While a big Modi victory would make it “far easier” for him to enact his proposals, she said, a strong opposition means “all legislation will be scrutinized.”

Shares Surge

Since Modi became chief minister of Gujarat 13 years ago, Adani Enterprises’s shares have risen about 85-fold, while the benchmark Sensex index grew about eight-fold. The stock has tripled since Modi was named prime ministerial candidate on Sept. 13, the eighth-fastest gain in that time among the 500 members of the S&P BSE 500 index.

“Investors believe the Adani Group has enjoyed tacit political support from Modi,” Surya Narayan Nayak, head of equity research at Sun Capital Advisory Services Pvt., said by phone, adding that he doesn’t have a rating on the stock. “They think that support would further be cemented if Modi manages to form the government.”

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Adani Enterprises shares rose 1.5 percent today in Mumbai, while the benchmark S&P BSE Sensex gained 0.3 percent. Adani Ports and Special Economic Zone Ltd. increased 3.5 percent.

Other individuals and Gujarat-based entities have also experienced growth since Modi was named as a prime minister candidate. Mukesh Ambani, India’s richest man and chairman of Reliance Industries Ltd. (RIL), has seen his wealth increase nearly 13 percent to $22.3 billion from $19.8 billion since Sept. 13, according to the Bloomberg Billionaires Index.

Land Purchases

An index of eight Gujarat-based companies, including Atul Ltd. (ATA) and Welspun Corp. (WLSI), has more than doubled since Sept. 13. The Sensex has climbed 14 percent in the same period. Atul climbed 8.7 percent today.

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Gandhi, along with Aam Aadmi Party leader Arvind Kejriwal, say the Gujarat government gives preferential treatment to Adani, citing an alleged sale of land to him for as little as one rupee ($0.02) a square meter.

Adani has denied the allegation, telling CNN-IBN in a televised interview broadcast on April 28 that he bought the land for an average of 15 rupees per square meter, and that he paid as little as 0.1 rupee per square meter for land when Gandhi’s Congress party ruled the state in the 1990s. Adani said it wasn’t fair to compare the value of the land before and after it was developed.

‘Not BJP’s ATM’

Adani Enterprises’s fundamentals haven’t changed since September and the surge in its share price occurred because of market speculation, according to Devendra Amin, a company spokesman. He declined to comment on claims that Adani will benefit if Modi becomes prime minister. Adani declined to be interviewed on the surge in wealth and opposition attacks over his relationship with Modi.

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“I have never received any special treatment from Modi, nor do I expect any,” Adani told CNN-IBN in the interview broadcast on April 28. “In any of his discussions, Modi always talks about policy matters and never about individual companies. I am not BJP’s ATM machine.”

Adani didn’t receive much formal education, and started off trading diamonds for a few years before joining his older brother’s plastics company, according to an article posted on the website of Adani Ports. Adani began trading plastics, and eventually started his own company called Adani Exports.