Gautam Adani is 2022's biggest gainer. What fueled his growth
What's the story
The year 2022 hasn't been a blockbuster for businesses around the world. Despite that, Indian billionaires have had a stellar year so far.
Among them, one man stands out: Gautam Adani. The third richest man in the world, he has now been crowned for making the most gains in 2022.
Let's take a look at the factors that propelled his meteoric rise in 2022.
Rise
Adani's net worth grew by $49.3bn this year
Adani is currently placed third in the Bloomberg Billionaires Index with a net worth of $126 billion, only behind Bernard Arnault and Elon Musk.
Compared to last year, Adani's fortune has grown by $49.3 billion this year, making him the only person in the top 10 to register any major growth this year.
Musk's net worth declined by $115 billion this year.
Companies
Market capitalization of listed companies has increased
This year has been a bumper one for Adani Group's listed companies. The seven listed companies of the group have a total market capitalization (m-cap) of $183.77 billion.
This year, Adani Enterprises registered a 123.82% growth in its m-cap, while Adani Power made a 172.71% jump.
Even the newly added Adani Wilmar has had a fruitful year.
Rise in price
Oil and gas prices aided Adani's rise
Adani's stellar rise this year was aided by the rise in oil and gas prices. At the same time, Adani Green Energy, the group's bet on renewable energy, has seen a 39.62% rise in its m-cap.
How can we explain that? Investors are ready to pay exorbitant prices for Adani stocks mainly because of the fear of missing out (FOMO).
FOMO
But what drives this 'fear of missing out'?
Adani's close relationship with India's Prime Minister Narendra Modi is well known. In the past eight years, his wealth has grown by 17 times from $7.3 billion in 2014 to $126 billion now.
Adani businesses' alignment with the vision of the current central government has instilled FOMO in investors. No one wants to miss out on a big payday.
Shopping
Adani Group has made some major acquisitions this year
Adani Group's diversification through acquisitions and mergers has been a major catalyst in the rise of Adani's fortune. This year, the company acquired a majority stake in Ambuja Cements Ltd. and AC Ltd., making it India's second-largest cement maker.
Adani Power, a group subsidiary, acquired DB Power Ltd. to expand its thermal power capacity. It also acquired infrastructure companies SPPL and EREPL this year.
Red flags
Are there any red flags in Adani's growth?
Despite the breakneck speed at which Adani is growing, several analysts and private investors are wary of his success model. Many believe that the group's companies are overpriced and overvalued compared to the respective industry average.
Skeptics also point out Adani's debt-funded expansion. The chances of this becoming a debt trap can never be written off.