Adani Group to raise $1-bn debt
Indian conglomerate back to fund raising act amid improvement in its debt metrics
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Adani Group is returning to fund raising amid improvement in its debt metrics. The group is likely to raise $1 billion through this route. Its ability to raise money of late is demonstrating the conglomerate’s determined efforts to regain normalcy after the short-seller Hindenburg’s broadside about six months ago.
However, experts feel that the amount to be raised by the group may be double than what is being reported at the moment.
Of late, the group, owned by billionaire Gautam Adani, raised $394 million trade finance facility from Barclays Plc and Deutsche Bank AG for funding its new-industries business vertical.
Adani New Industries raised funds for working capital requirements for its integrated solar module manufacturing plant. The unit is setting up a green hydrogen business, which includes solar module and wind turbine manufacturing. AdaniConneX sold $213 million worth of senior debt to finance data centre construction in June, while Adani Enterprises raised Rs. 12.5 billion through a local currency bond sale earlier this month.
Talking to Bizz Buzz, Joydeep, consultant at Phillip Capital India (fixed income desk), said: “See, the rating of Adani group companies in India ranges from AAA to A. But when it comes to raising money abroad, then the highest rating Indian companies receive for raising money through debt by credit rating agencies like S&P, Fitch and Moody, is BBB. This is due to our sovereign rating by these agencies. The cost of funds for raising money abroad, including forward covers for foreign exchange, for Adani group must be optimal. Any receipts in forex business abroad, offset the requirement of forward cover.”
Apart from green hydrogen, the group’s strategic business investments are centred around airport management, roads, data centres and primary industries such as copper and petrochem.
The group is in talks with Barclays Plc, Deutsche Bank AG and Standard Chartered Plc to borrow between $600 million and $750 million to refinance the debt taken to finance its purchase of Ambuja Cements, Bloomberg reported recently.
Adani New Industries has raised $394 million via a trade finance facility from Barclays and Deutsche Bank for a solar module project.
Anil Kumar Bhansali, Executive Director,Finrex Treasury Advisors LLP, says, “After months of damages due to Hidenburgh reports, which sent its stocks down, theAdani Group wants to shore up investor confidence by raising $ 1.8 billion through bond markets in lots of Rs5 billion to Rs10 billion.”
The plans are yet to be finalized and the final amount could be double the amount disclosed above. The group has already raised Rs12.5 billion through sale of Indian bonds. It could also borrow $ 600 million and $ 750 million to refinance debt taken to purchase Ambuja Cements, he said. Flagship Adani Enterprises led most listed entities of the conglomerate higher on Friday and closed 1.4 per cent higher.
The latest efforts to secure loan deals indicate that the conglomerate is restoring investor confidence after Hindenburg accused it of widespread corporate malfeasance in January.
Even though Adani has vehemently denied the allegations, the company’s shares and bonds have recouped some losses from an initial selloff that at one point had wiped out more than $150 billion of the group’s market value.
In June, AdaniConneX sold $213 million of senior debt to finance data center construction, while Adani Enterprises raised $153 million, through a local-currency bond sale this month. The conglomerate is also in discussions with other lenders as it seeks to refinance the $3.8 billion of debt taken for its Ambuja acquisition. If executed, the loan of $750 million would be part of that broader refinancing.The loan would be syndicated, sources revealed. The talks haven’t yet concluded, and the amount could still vary.
Meanwhile, the group aims to transform the entire Dharavi slum into a glitzy hub.
AdaniConneX sold $213 million worth of senior debt to finance data centre construction in June. The purchase of Holcim’s Indian cement assets last year made the conglomerate the country’s second-largest producer of the construction material.
To finance that deal, bridge loans maturing in 2023 and 2024 were taken out by Mauritius-domiciled Endeavour Trade & Investment, the Adani Group vehicle that acquired Holcim’s cement business.
