Before Narendra Modi became India’s prime minister in 2014, he would often travel around the country in the private plane of businessman Gautam Adani, who like him was from Gujarat. No businessman has been as close to Mr Modi over the years as Mr Adani, analysts say.
Today, Mr Adani is the second-richest person in India, according to Forbes, worth more than $25bn. The tycoon has made his fortune largely in infrastructure, a sector where politics and business go hand in hand. He has been building and operating power plants, ports, airports and, lately, renewable energy assets, first in his home province and then across India.
Mr Adani keeps a lower profile than the richest person in the country, Mukesh Ambani of Reliance Industries. But both are from Gujarat, operate in highly regulated industries and have benefited from close relationships with Mr Modi.
Business and politics have always been intertwined in India. But the astonishing concentration of wealth and power in the empires Mr Ambani and Mr Adani control has drawn criticism from those who fear that financial success is becoming too dependent on close relations with the government.
“India is evolving its own brand of capitalism, which involves a collaboration between government and business,” said Rajiv Lal, the retired head of Infrastructure Development Finance Corp in India and now a professor at Singapore Management University. “At the heart of that model is the concept of national champions; aggressive entrepreneurs with the backing of government for whom scale is everything.”
In a country where many companies have been brought down by failed efforts to build infrastructure, Mr Adani stands out both for his connections and an uncanny ability to execute.
Mr Adani’s wealth and prominence have been rising rapidly — in 2018 he was just 10th on the Forbes India list with $12bn. But the soaring market value of his renewables business and the Adani Group’s takeover of eight of India’s largest airports have catapulted him to a new level of fame — and scrutiny.
The rise of renewable energy has boosted a new class of successful entrepreneurs in India, in companies such as ReNew Power and Greenko as well as Adani Green Energy.
The success of green power has come at an opportune time for Mr Adani. Not long ago, he appeared to be just one of many struggling promoters who were deeply in debt to their bankers. In 2017, for example, the group had to cancel a mining services contract for work on an Australian coal mine due to an inability to raise funds.
At home, infrastructure is always a risky business in a country where the cost of capital has been perennially high. “A few years ago he was in serious trouble. His power assets did not look viable. His ports were not generating enough cash flow,” said one Mumbai-based analyst. “He has reinvented himself, he has managed brilliantly.”
Through the prudent use of capital, Mr Adani became a predator, buying assets from his more leveraged counterparts. And when the government put up assets for sale, such as six airports, he was able to outbid his rivals.
To be sure, competitors still talk about the extent to which Mr Adani is able to take advantage of his connections. They point to recent government contracts put out to bid that play to the Adani Group’s strengths. These include solar projects that require the panels to be made in India, rather than China; Adani is a huge maker of such panels. When the group won the right to buy the operating rights for six government-owned airports two months ago, there were voices within the government airport authority as well as the opposition raising questions about a sector monopoly.
Still, “the game has changed”, said the co-head of India for one major international investment firm in Mumbai. “Today capital is the key differentiator. You can ask the government for favourable policies but you can no longer ask for individual favours. You need sensible execution. It isn’t enough to just have political connections.”
It would be naive to imagine that political connections will cease to be relevant in almost any sector, but Mr Adani’s accrual of vast wealth points to a much larger problem. There are far too few Indian business people who can use their capital wisely and execute effectively enough to compete with him.