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Adani Gas Ltd, the gas sourcing and distribution business that was spun off from Adani Enterprises Ltd earlier this year, will be listed on the BSE and NSE in November, according to bankers involved in the process.
Earlier this month, the Adani Group signed an agreement with French oil and gas giant Total SA to set up a joint venture to develop multi-energy offerings such as LNG and fuel retailing.
On September 9, the shareholders of Adani Enterprises were allotted one equity share of AGL (face Value of Re 1) for each share held in Adani Enterprises.
Adani Gas Holdings Limited (AGHL) will merge with Adani Gas Limited, according to the scheme of arrangement approved by the National Company Law Tribunal in August.
Post listing, the promoters will hold 74.92 per cent stake in Adani Gas with the balance held by the public.
The group runs city gas distribution (CGD) networks at Ahmedabad, Vadodara, Faridabad and Khurja and has won rights to set up CGD networks in 13 more cities on its own and another 16 through a joint venture with state-owned Indian Oil Corporation (IOC), making it the largest privately run CGD company in the country to be listed.
Adani Gas has a pipeline network of over 5,500 kms, more than 70 CNG stations with a customer base in excess of 450,000.
The Adani Group also owns a 25 per cent stake in a 5 million tonne (mt) capacity LNG import terminal at Mundra in Gujarat, where it runs India’s biggest port. The infrastructure conglomerate is also constructing a 5 mt capacity LNG import terminal at its Dhamra port in Odisha. The Group is also building a 3.2 mt LPG terminal at Mundra and a 1.2 mt LPG terminal at Dhamra.
The company has signed gas purchase agreements with Gail (India) Ltd and GSPC Ltd.
Adani Enterprises said in a presentation that the hive off and listing was meant to unlock the value of CGD business currently embedded in the value of AEL, enabling share-holders to get direct exposure to the high growth CGD business of Adani Gas by removing holding company discount.
India’s currently has three listed CGD firms – Indraprastha Gas Ltd, Mahanagar Gas Ltd and Gujarat Gas Ltd.
The listing of Adani Gas coincides with a “disappointing” performance by the three-listed firms in the just concluded ninth round of bidding for CGD networks.
The top-3 players have not only lost potential new areas, but also run the risk of facing competition in their extant areas, as and when third-party participation is facilitated by the Petroleum and Natural Gas Regulatory Board (PNGRB), according to Kotak Securities Ltd.
“In our view, the downstream oil PSUs and private players may consider marketing CNG or industrial/commercial PNG through the established CGD networks in lucrative areas of Delhi, Mumbai and Gujarat, where the five-year marketing exclusivity has already expired,” Kotak Securities said in a note on 25 September.
Third-party marketing in extant CGD networks can be facilitated by PNGRB by declaring existing CGD networks as common carrier to provide open access post expiry of marketing exclusivity and notification of regulatory framework for CGD tariffs for third-party access on nominated areas and finalization of such tariffs in the extant areas subsequently.
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