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Adani hives off power, ports businesses to boost growth

NEW DELHI (Reuters) - Indian conglomerate Adani Group unveiled a wide-ranging restructuring of its businesses on Friday in a move designed to make it easier for the group to expand its mining, ports and power operations.

A worker sprays water over piles of coal as a bulldozer shifts coal at Mundra Port Coal Terminal in Gujarat April 2, 2014. REUTERS/Amit Dave/Files

Adani, which has revenues of more than $9.4 billion across its businesses, is now India’s largest private port operator and its biggest thermal power producer after a series of acquisitions over the last year from rivals.

Founder and Chairman Gautam Adani, 52, is a close associate of Prime Minister Narendra Modi and has enjoyed a rapid recent rise in Indian business circles, often associated with Modi.

Once the restructuring is complete, Adani Enterprises would be left to focus on mining operations, including a huge $7 billion project to develop the Carmichael coal mine in Australia.

The group’s port and power businesses would be spun out of the flagship Adani Enterprises into its listed power and port subsidiaries.

It also plans to list Adani Transmissions Limited as a separate entity on the Bombay Stock Exchange and merge Adani Mining Private Limited into the Enterprises holding company.

The restructuring, which has been approved by Adani’s board, “will simplify corporate structure and is a decisive step towards unlocking the potential value of the Adani Group Companies,” Chairman Gautam Adani said.

Shares in Adani Enterprises’ closed up 7.5 percent, after having climbed more than 9 percent on news of the demerger, its highest level since mid-2011 and valuing the company at around $11.2 billion.

“The true value of the businesses has not been reflected in the share prices,” said Deven Choksey, managing director, KR Choksey Securities. “This will allow Adani to grow faster because they will have more firepower.”

In a separate statement, Adani said consolidated earnings before interest, tax, depreciation, and amortisation at the Enterprises holding company rose 57 percent for the three months ending Dec. 31 from a year earlier, to 34 billion rupees.

Under the demerger, shareholders in parent Adani Enterprises will get new shares in Adani Ports and Special Economic Zone Ltd and Adani Power Ltd. Adani Group owns a majority stake in both companies.

($1 = 61.9100 rupees)

Reporting by Tommy Wilkes; Editing by Sunil Nair and Elaine Hardcastle