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Total Makes $600 Million Bet on India With Adani Stake

Stock MarketsOct 14, 2019 08:49AM ET
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(Bloomberg) -- French energy giant Total SA (PA:TOTF) is spending $600 million to expand its presence in one of the world’s fastest-growing natural gas markets.

Total agreed to purchase a 37.4% stake in India’s Adani Gas Ltd., a distributor of the fuel that’s developing import terminals and a national chain of vehicle-filling outlets. The deal gives the French company a footprint in a market where annual liquefied natural gas demand will hit 28 million tons by 2023, making it the fourth-biggest importer of the fuel, according to BloombergNEF.

Total is the latest energy major seeking to expand in India, where population growth and economic development are luring some of the biggest oil and gas producers. In August, Reliance Industries Ltd. said Saudi Arabian Oil Co. may buy 20% of its oil-to-chemicals business at an enterprise value of $75 billion.

“Energy needs in India are immense,” Total Chief Executive Officer Patrick Pouyanne said in a statement. “The natural gas market in India will have a strong growth and is an attractive outlet.”

Total has recently made several investments to beef up its presence in LNG. It agreed to take over a Mozambique LNG project earlier this year as part of a deal for Anadarko Petroleum Corp (NYSE:APC).’s assets in Africa. It has also absorbed Engie SA’s upstream assets, boosted its investment in Tellurian Inc. and its Driftwood LNG venture, and plans to sanction a new gas-export project in Papua New Guinea.

“Total’s investment in Adani is undoubtedly a show of faith in India’s gas demand growth,” Nicholas Browne, a Singapore-based analyst at Wood Mackenzie Ltd., said in an email. Gas consumption will almost double to 106 billion cubic meters by 2030, with LNG meeting about 55% of the demand growth, according to the consultant.

Adani, whose shares jumped as much as 18% and headed for the highest close since July, is developing the Mundra and Dhamra LNG import terminals in India. It plans to expand its distribution network in the next decade to about 6 million homes and 1,500 retail outlets for natural gas vehicles.

Total said the acquisition will cost about $600 million taking into account its divestment of another Indian LNG terminal earlier this year.

Total will make the purchase through a tender offer to public shareholders for as much as 25.2% and the residual shares from the Adani family, Adani Gas said in a statement to stock exchanges. The Times of India reported in June that Total was close to buying a 30% stake in Adani for more than $800 million.

Total Makes $600 Million Bet on India With Adani Stake
 

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