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Addressing Sri Lankan officials and US diplomats in a Colombo hotel last week, Karan Adani emphasized that the newly secured $553 million US government financing deal for a port terminal developed by his family’s conglomerate is a “reaffirmation by the international community.”
This announcement serves as a significant boost for the Adani Group, which has faced challenges, including a damaging short-seller attack and corporate fraud allegations this year. Moreover, it highlights Washington’s backing for the port empire owned by Karan’s father, billionaire Gautam Adani, positioning it as a strategic move to counter China’s maritime influence in the Indian Ocean.
Given that these waters account for a substantial portion of global bulk cargo traffic and oil shipments, Adani’s port ambitions are viewed as a strategic play by Chakri Lokapriya, Chief Investment Officer at TCG Asset Management Co. in Mumbai. Lokapriya sees this move as India’s response to counter China’s expanding network of ports in the region, extending from Sri Lanka to Pakistan.
Adani Ports and Special Economic Zone Ltd., considered the conglomerate’s flagship entity, is now exploring additional “opportunities in our neighboring countries,” according to Karan Adani, the CEO. In an interview with Bloomberg News in the Sri Lankan capital, he mentioned potential ventures in Bangladesh, as well as East African and Southeast Asian nations, including Tanzania and Vietnam. This expansion plan builds upon existing developments in Sri Lanka and Israel.
Sanjiv Bhasin, Director at Mumbai-based IIFL Securities Ltd., described this approach as a noteworthy move akin to a Chinese-style expansion, emphasizing a global outlook that goes beyond China.
US funding for the West Container Terminal in Colombo, led by Adani, through the International Development Finance Corp., provided a significant boost following a challenging period for the Adani Group’s global expansion endeavors.
The conglomerate abandoned its Myanmar port project due to a military coup, and in the previous year, faced protests and political scrutiny in Sri Lanka. The country criticized Adani’s port and energy proposals, labeling them as opaque initiatives imposed by New Delhi.
Although Adani Ports holds the position of India’s largest operator, managing 14 domestic terminals with a capacity of 600 million metric tons, it is currently a modest player on the global stage. To pose a substantial challenge to China’s extensive sphere of influence, built on investments in over 90 ports abroad, 13 of which are predominantly Chinese-owned, Adani Ports will need to undergo significant expansion. This information is based on findings from the US Council on Foreign Relations.
