Adani Ports sells Australian rail logistics unit to parent company Adani Enterprises
Adani Ports and Special Economic Zone Ltd (APSEZ) sold its investment in Bowen Rail Company Pty Limited (BRCPL), the rail logistics unit in Australia, to Adani Global Pte Limited, for undisclosed value as the largest port operator Indian private sector seeks to become carbon neutral and improve its environmental, social and governance (ESG) ratings.
APSEZ has signed the share purchase agreement with Adani Global Pte Limited (Singapore subsidiary of Adani Enterprises Limited) for the sale of the investment in BRCPL, APSEZ said in its annual report for 2020- 2021.
“The transaction is pending regulatory approval from Australia’s Foreign Investment Review Board. In the meantime, APSEZ will reflect the investment as “held for sale” in its books, ”the annual report says.
BRCPL was incorporated in December 2019 as a subsidiary of Bowen Rail Operation Pte Ltd, a unit of APSEZ based in Singapore, to undertake the rail transport of coal produced from the Carmichael mine in Australia.
The Adani group had to resort to “self-financing” after a growing global campaign to ensure that no financial institutions were involved in the Carmichael mine project.
BRCPL intended to use APSEZ’s balance sheet to finance investments – estimated at A $ 500 million (US $ 350 million) for a rail transport capacity of 27 million tonnes per year for the purchase of coal locomotives and wagons, as well as associated maintenance installations and equipment.
As part of the annual evaluation of ESG performance by management, APSEZ has decided to sell its stake in BRCPL in order to comply with carbon neutrality commitments.
This is the first divestment by APSEZ from a segment that is under increasing scrutiny, with the assessment of environmental, social and governance (ESG) risks assuming a key criterion in global financial markets.
APSEZ is considering dollar loans for its financing needs. The company has raised $ 1.55 billion through three cross-border bond issues listed in US dollars in recent months. Currently, 69% of the company’s long-term debt is denominated in US dollars.
APSEZ has often been accused of ignoring environmental and social rules in its rise to become India’s largest port operator in just under two decades.
The company now aims to become the world’s leading carbon-neutral port company by 2025, with all port freight operations powered by renewable energy.
“We are taking steps to improve our ESG rating,” the report said.
ESG risks occupy a central place in our assessment process because they can have a significant impact on the business model and the value drivers of the company (income, margins and capital expenditure), he said.
In today’s global economy, environmental and social responsibility is essential. APSEZ’s ESG strategy is based on the principle that the creation of sustainable value is not only beneficial for the company but for the entire value chain.
As it seeks to become the world’s leading port company by 2030, APSEZ has said it will encourage practices that improve the environmental and social impact of its operations.
Due to the high carbon footprint of the maritime sector, APSEZ is in a unique position to drive positive change by implementing strategies to mitigate, measure and report environmental impact.
“As India accelerates its port-led development, while aggressively engaging in mitigating the impacts of climate change, we are in a position to deepen decarbonization,” he added.