A surprising move, the US International Development Finance Corporation (DFC) has pledged a substantial investment of $553 million in the Colombo port terminal project, a collaboration involving Adani Ports and Special Economic Zone Limited, John Keells Holdings, and the Sri Lanka Ports Authority. The announcement sent shares of Adani Ports soaring over 2% on Wednesday, marking a significant development in the face of recent controversies surrounding the Adani Group.
The investment, a first-of-its-kind from the US government in an Adani project, comes as a ringing endorsement of the conglomerate’s capabilities and vision. Adani Ports, a key player in billionaire Gautam Adani’s business empire, expressed confidence in the Group’s ability to create a world-class container facility in Colombo Port. This move by the US government signals a partnership aimed at addressing critical challenges in the developing world, spanning sectors such as energy, healthcare, infrastructure, agriculture, and small business and financial services.
The significance of this investment is amplified by recent accusations from US short-seller Hindenburg Research, which accused Adani of accounting fraud and artificially inflating its share prices. Describing it as a “brazen stock manipulation and accounting fraud scheme” and “the largest con in corporate history,” Hindenburg’s report had a substantial impact on Adani’s market value, wiping out billions of dollars at one point. Despite the controversy, the Adani Group staunchly denies these allegations.
Karan Adani, Whole Time Director and CEO of Adani Ports, welcomed the association with the US DFC, stating, “We see this as a reaffirmation by the international community of our vision, our capabilities, and our governance.” The Colombo West International Terminal project, upon completion, is expected to bring about a transformative impact on the socio-economic landscape, generating thousands of direct and indirect employment opportunities and significantly boosting Sri Lanka’s trade and commerce ecosystem.
The Port of Colombo, the largest and busiest transshipment port in the Indian Ocean, has been operating at over 90% utilization since 2021, underscoring the need for additional capacity. The new terminal will strategically cater to the growing economies in the Bay of Bengal, leveraging Sri Lanka’s prime position on major shipping routes and its proximity to expanding markets.
Despite the recent controversies, Adani Ports’ scrip exhibited a positive trend, trading 2.13% higher at Rs 814.55 apiece on the NSE at 10:56 am. Over the last six months, the stock has rallied nearly 20%, indicating a resilient performance in the face of challenges. As the Colombo port project progresses, it remains to be seen how this collaboration will not only bolster Adani’s global standing but also contribute to the economic development of Sri Lanka and the broader region.