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TotalEnergies is to invest $300mn in a renewables venture with the Adani Group, the first European company to sign a big deal with the Indian conglomerate since it was hit with fraud allegations early this year.
The French group and Adani Green Energy on Wednesday announced a “binding agreement” to form the wind and solar tie-up.
Total’s investment comes eight months after US short seller Hindenburg Research published a report accusing billionaire Gautam Adani’s eponymous group of stock manipulation and accounting fraud, which it strenuously denied.
It also follows revelations by the Financial Times, the Guardian and the Organized Crime and Corruption Reporting Project, a global network of investigative journalists, about secret investors in the business, which has dismissed the reports as “recycled allegations”.
A sell-off after the Hindenburg report wiped as much as $150bn from Adani Group companies’ stock market value. The fast-growing business empire has clawed back some of those losses, appeasing investors by buying back $2.65bn worth of share-backed loans, slowing non-core investments, showing bumper profits and selling assets, including billions of dollars’ worth of stock and its non-bank lending company Adani Capital.
“We are delighted to extend our long-term partnership with TotalEnergies” in Adani Green Energy, said Gautam Adani, Adani Group chair. Total chair and chief executive Patrick Pouyanné said the new joint venture would “speed up our development through direct access to a large portfolio of assets”.
In a stock exchange filing, Adani said part of the new joint venture agreement was to “modify certain terms” of Total’s previous investment in Adani Green Energy Twenty Three, the Adani Green Energy subsidiary they co-own. Adani did not immediately respond to questions on how the previous joint venture would be changed.
Total told the FT: “This is a joint venture which gives TotalEnergies direct access to ownership of the assets contributed by [Adani Green Energy]. This allows us to pursue our renewable growth in India, according to our strategy.”
Total and Adani have since 2018 pursued a series of energy-related ventures together, including a port terminal that received its first shipments of liquefied natural gas in April this year. The French oil major co-owns listed city gas company Adani Total and holds a fifth of Adani Green Energy’s equity. Total estimated its overall exposure to Adani at $3bn as of the end of last year.
But the French group’s latest investment is the clearest sign yet that it is willing to move ahead with its embattled Indian partner, after it paused a $4bn planned stake in a green hydrogen project with Adani in February following the short seller attack.
The companies have not commented on the future of that green hydrogen investment but Adani says it has pressed ahead without Total’s money. Adani Enterprises’ chief financial officer Jugeshinder Singh told analysts last month that a 2022 memorandum of understanding was still in place but Total had yet to complete its due diligence. However, he added, the project was “not dependent on that equity as we are going ahead”.
The new joint venture comes even though Adani has yet to carry out a February pledge to undergo an independent audit by a multinational accounting firm, a move welcomed by Total at the time.
When Deloitte quit last month as auditor of listed Adani company Adani Ports and Special Economic Zone, it cited the Indian conglomerate’s refusal to have an “independent external examination” as one of its reasons for resigning.
The Adani Group is regaining momentum in international partnerships after lying low during the Hindenburg fallout. Its flagship company Adani Enterprises this month struck a joint venture with the Singaporean subsidiary of Japan’s Kowa for marketing green hydrogen and ammonia in Japan, Taiwan and Hawaii.
Additional reporting by Robert Smith in London.
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