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Adani Power Buys Distress, Builds Capacity at Fraction
9 Sep
Summary
- Adani Power acquired a third of its operational capacity through distressed asset purchases.
- Acquisitions under bankruptcy law offer capacity at a fraction of new build costs.
- Company targets 42GW total capacity by FY32, with 10.9GW from acquired assets.
Adani Power has established a successful strategy of acquiring distressed energy assets, primarily through India's decade-old bankruptcy law. This approach has allowed the company to significantly expand its operational capacity, with one-third of its current 18.3-gigawatt (GW) capacity sourced from such acquisitions. These deals enable Adani Power to add capacity at a substantially lower cost compared to building new facilities.
Analysts note that this capital-efficient growth lever has been repeatable, with acquisitions often yielding assets at a steep discount to greenfield replacement costs. The company has added approximately 7.8GW through various acquisitions, including its proposed takeover of GVK Energy. Adani Power's successful turnaround of these assets post-acquisition has also been a key factor, generating significant earnings before interest, taxes, depreciation, and amortization (Ebitda).
Looking ahead, Adani Power plans to add 23.7GW of new generation capacity, with 10.9GW originating from acquired assets through the Corporate Insolvency Resolution Process (CIRP). This expansion aims to boost the company's total capacity to 42GW by FY32, positioning it as a major player in India's energy sector. The company emphasizes a disciplined approach to acquisitions, evaluating asset quality and potential for value creation.
