Even Saudi Aramco has a lot to gain from an investment from Gautam Adani

• Adani Group is now looking to buy a stake in the world’s biggest oil exporter Saudi Aramco.
• The Adani Group has a range of businesses covering ports, power, renewable energy, airports, coal trading and data centres.
• Saudi Aramco was looking to get a stake in Reliance Industries, but the talks fell through.

A lot of investors were left disappointed after the deal between Mukesh Ambani-led Reliance Industries and oil biggie Saudi Aramco fell apart last November. After all, the investors and shareholders had waited nearly two years for Saudi Aramco to invest $15 billion in India’s most valued business.

Now, the word has it that the Adani Group has jumped into the bandwagon and is now looking to buy a stake in the world’s biggest oil exporter.

According to a Bloomberg report citing sources it did not name, Gautam Adani willing to shell out billions of dollars to buy a stake in Saudi Aramco.

Therefore, it may look at a broader tie-up or asset deal to acquire the said stake from Saudi Arabia’s sovereign wealth fund Public Investment Fund (PIF), as per the report.

Adani’s infrastructure is a value-add

The report suggests that the port-to-energy Adani Group may also offer PIF the opportunity to invest in its infrastructure in India. Anshuman Khanna, director at consultancy ValPro, highlighted that the Adani Group has built a unique infrastructure in India that can be leveraged to incubate world class businesses relevant to the “future” such as renewable energy, data centres, petrochemicals, natural gas infrastructure and hydrogen.

“A deal with Adani could provide [Saudi] Aramco an opportunity to participate in the India growth story and diversify its portfolio from traditional oil and gas. It would be complementary to the multiple partnerships Adani group has nurtured over years with conglomerates such as Total, Wilmar and Indian Oil. Each partnership sustains on the premise that each partner is bringing a unique value proposition to the partnership and there is trust and transparency between the groups,” Khanna told Business Insider.

The Adani Group has a range of businesses covering ports, power, renewable energy, airports, coal trading and data centres.

Petrochemical to renewable energy — Adani has got it all

Adani's existing businesses in renewable energy and its recent foray into petrochemicals could be worthwhile for Saudi Aramco. Last year, Adani Group had set up a new subsidiary that will set up refineries, petrochemical complexes and hydrogen plants to directly compete with Reliance Industries, which is the biggest petrochemical business in the country and among the top 10 in the world. The company also plans to set up a ₹14,000 crore petrochemical plant for this.

Khanna elaborated that Saudi Aramco would find a client in Adani’s petrochemical business. This is even more crucial since the world is moving towards more sustainable sources like solar energy, which means that the use of oil and gas in vehicles would be limited in the times to come. However, oil and gas usage in the petrochemicals industry will continue as it is. “This will help them a lot in terms of continuing to find a home for oil and gas,” he added.

He noted that Saudi Aramco was looking to get a stake in Reliance Industries because of their petrochemical business, but that deal did not go through due to valuation difference. Adani Group is a good enough alternative to that in his opinion.

Meanwhile, Suman Jagdev, partner of industrial goods and services at Praxis Global Alliance also pointed that the partnership with Saudi Aramco will help Adani too strengthen their business portfolio and “create a scale play across the oil and gas value chain”. “This would help increase cash flow and fuel growth. It may further open infrastructure investment opportunities in India by Saudi investors and strategics,” he added.

Adani Green Energy Limited (AGEL) is currently among the largest renewable energy businesses in India in terms of market capitalisation, which further strengthens its future.

According to Bloomberg Billionaires Index, Gautam Adani is Asia’s second richest person with an estimated net worth of about $90.5 billion. He is the eleventh richest man in the world, after Tesla’s Elon Musk, Amazon’s Jeff Bezos, Microsoft’s Bill Gates, Reliance’s Mukesh Ambani and others.

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