Adani Enterprises Sees Huge Potential In Data Center Business, $1.5 Billion Capex Planned

Gautam Adani-led firm Adani Enterprises Ltd., is likely to spend nearly $1.5 billion on its fledgling data center business in the the upcoming three years, according to a Bloomberg report. This comes as Gautam Adani-led Indian conglomerate refocuses on growth after the short seller Hindenburg Research report on January 24 this year levelled serious allegations against the group and sent it into months of damage control. Today, Adani Enterprises sahres gained 0.32% at Rs 2220.70 per share at 10:44 am IST.

AdaniConnex Pvt. is a joint venture between Adani Enterprises and the global data center provider EdgeConnex Inc. In February 2021, Adani Enterprises and EdgeConneX announced the establishment of a 50:50 joint venture.
The annual capital expenditure (capex) on the data center business, known as AdaniConnex Pvt. - is estimated to be around $500 million this year and the next two years, Jugeshinder Singh, Adani Enterprises chief financial officer, told analysts according to a filing late Wednesday according to the report.

The company is mulling to build nine data centers targeting a total capacity of 1 gigawatt by 2030. This will provide infrastructure for the booming digital services demand in the country of 1.4 billion people that has already attracted e-commerce and tech giants such as Amazon.com Inc and Google.

According to a recent investor presentation by the company AdaniConnex, has just one operational data center in Chennai, and has completed 63% and 65% of the construction in the Noida and Hyderabad facilities.

Chennai's phase 2 development is under progress while land acquisition is on for Hyderabad and Navi Mumbai. The JV firm raised $213 million in debt in June.

The AdaniConneX JV is focussing on building a network of hyper scale data centers in India, starting with the Chennai, Navi Mumbai, Noida, Vizag, and Hyderabad markets.

Is the data center business a new incubator for Adani group?

The entry into the data center business is one of the new business initiatives by Adani Enterprises and is seen as the incubator for the group. The group reported lower-than-expected earnings this month as revenue from the conglomerate's traditional coal trading business dropped while newer businesses did better.

The latest capital spending guidance by the CFO indicates accelerated expansion at the ports-to-power conglomerate that spent much of this year recovering from Hindenburg's bombshell allegations of corporate fraud. The group has denied the charges and called them baseless. It remains to be seen how the group goes along with its new business initiatives where it is exiting a few businesses to invest deeply in core focus areas like infrastructure. Recently, a report highlighted that the Gautam Adani group is considering selling the entire 43.97% stake in Adani Wilmar.