TotalEnergies says it could trim its stake in Adani Green

Bloomberg

TotalEnergies SE said it could sell a small part of its 20% stake in Adani Green Energy Ltd. to cash in on the jump in the valuation of the Indian renewable energy producer.
The French energy giant bought 20% of Adani Green in 2021 for $2 billion, building on a series of previous deals with Indian billionaire Gautam Adani. That stake was worth about $10 billion at the end
of August, according to
TotalEnergies.
Patrick Pouyanne, the chief executive officer of TotalEnergies, said in response to a question during an investor presentation that the appreciation in value is “a source of potential cash.” In an interview in New York, Pouyanne said his company has no plan right now to cut its holding, and if it did so, any reduction would be small and only to recoup some of its initial investment.
“We are committed to Adani Green,” he said in the interview.
Adani Green’s shares are up 54% this year, compared to a 1.8% decline in the benchmark S&P BSE Sensex Index in India. Still, Adani Green is down 15% so far this month amid concerns that it’s taking on too much debt as it expands.
Gautam Adani, Asia’s richest man, has pledged to invest around $70 billion in the entire green energy supply chain by 2030. His conglomerate aims to become the world’s biggest renewable power producer by the end of this decade.
In June, TotalEnergies agreed to buy a 25% stake in Adani New Industries Ltd. for an undisclosed sum, part of a plan to invest billions of dollars in green hydrogen development in India. Adani New Industries is owned by Adani Enterprises, the flagship firm of the coal-to-ports conglomerate controlled by the Indian magnate.
The French oil major is increasing spending on renewable energy and on reducing its emissions next year to 33 percent of annual capital expenditure, compared with 25 percent going into clean power this year, the company said in a presentation.
The plan comes against a backdrop of record oil and gas earnings for the world’s biggest energy companies this year, which has made them star performers amid a broader malaise across equities markets. Europe’s energy crisis and its scramble to replace Russian natural gas supplies has also fueled a debate over whether energy security should be prioritised over environmental targets.
Pouyanne said in an interview with Bloomberg News in New York that oil and gas remain vital to the energy mix. But the CEO added that if he didn’t also push a transition towards carbon-free energy, his successor would regret it.
“I don’t want my company to disappear,” he said. “We have embarked into a strategy to diversify out of a pure oil and gas business model to add an electricity one.”
Pouyanne also said that as TotalEnergies builds out its solar and wind generation, he wants 30% of the portfolio to be unsecured, with no power price agreements. That’s potentially more profitable than relying on long-term contracts, he said. TotalEnergies has set a goal of 100 gigawatts of renewable power generation capacity by 2030.
To be sure, TotalEnergies has also made significant investments in oil and natural gas. Gas and liquefied natural gas investments represent about a quarter of capital spending between 2022 and 2025.