InvestorQ : What do you think is the benefit of the French company, Total, buying a stake in Adani Green Energy?
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What do you think is the benefit of the French company, Total, buying a stake in Adani Green Energy?

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NISHA Nayak answered.
2 months ago
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Total SA, one of the world’s leading oil and energy companies based out of France, has announced a stake purchase in Adani Green Energy, part of the Adani group of India. It is one of the biggest deals in the alternate energy space and Total SA of France will acquire a 20% stake in Adani Green Energy as part of this deal.

You would probably recollect that the stock of Adani Green Energy has been one of the star performers in the Indian stock market in last one year. In fact, the stock has appreciated more than 25 times in the last one year itself and it also became the first Adani group company to cross Rs.100,000 crore in market capitalization.

Total will pay a sum of $2.5 billion for purchasing the 20% stake in Adani Green Energy. This would be valuing the full equity at $12.5 billion. However, there is a catch in doing such a calculation. This is highly interconnected transaction with multiple commitments given by Total to the Adani group.

In fact, the commitments include LNG terminals, gas utilities and renewable assets across India, which will be part of this package deal. Adani Green Energy already boasts of the largest solar capacity in the world and is poised to grow rapidly. It is one of the leading lights of the solar energy push in the Indian market.

For Adani Green, this gives more power to the balance sheet and enables the company to better monetize its growth. For Total, which is still an old economy energy company, this helps them to de-risk their hydrocarbons model. In fact, it is on these lines that even RIL is largely translating its oil to chemicals business into more of a green business.

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