Indias Adani Group is currently, in talks with experts to secure 1,500 crore rupees ($181 million) for each of its divisions through local currency bonds. This effort is part of the conglomerate’s goal to raise a total of 100 billion rupees during this year. The decision comes after Adani faced a pause since January due to concerns raised by Hindenburg Research although the group has strongly denied these allegations. Adani Airport Holdings and Adani Ports are expected to take the lead by offering bonds worth 10 to 15 billion rupees each potentially commencing in September depending on market conditions. Additionally, other companies within the group are also exploring options, for debt issuance.
India’s Adani group is actively engaging with merchant bankers to secure substantial funding of up to Rs 1,500 crore ($181 million) for each of its units through local currency bonds. This strategic move is aligned with the conglomerate’s ambitious goal of raising 100 billion rupees in the current financial year.
This marks a significant step for the Adani group as it seeks to reenter the local bond market. The group had refrained from such endeavors since January, following concerns raised by U.S. short-seller Hindenburg Research. The apprehensions cast doubts on the governance practices within the group, leading to a substantial decline in the stocks of its companies. It’s worth noting that the Adani group has vehemently refuted these allegations.
In this upcoming venture, Adani Airport Holdings and Adani Ports and Special Economic Zone are anticipated to lead the way. These two units are contemplating market entry with bond offerings ranging between 10 to 15 billion rupees. The timeline for this initiative is set for as early as September, as indicated by a knowledgeable banker.
To ensure the success of this undertaking, the Adani group is adopting a prudent approach. The group is evaluating the investment climate and sentiment among potential investors. Only when a favorable demand landscape is established will the group proceed with the bond issuance? A well-versed financial expert advising the conglomerate emphasized this sentiment.
Moreover, Adani Enterprises, the flagship entity of the group, and Adani Electricity Mumbai are actively exploring the possibility of raising funds through debt issuance. However, concrete plans will only be formulated after the release of the market regulator’s report on its investigation into the Hindenburg allegations. The eagerly awaited report is anticipated to be unveiled by Monday, thus paving the way for the finalization of these fundraising strategies.
In the initial stages, Adani group companies may need to offer a higher spread compared to their previous issuance. This is attributed to the cautious stance adopted by domestic institutional investors. The initial demand for these bonds is expected to stem from corporations, high net-worth individuals, and select banking institutions, according to a knowledgeable financial expert.
Notably, Adani Enterprises re-entered the market in July, successfully raising Rs 1250 crore through three-year bonds. However, this move incurred higher interest costs, totaling 10%. Adani Ports’ most recent interaction with the market was in October 2021, wherein it generated Rs 1000 crore through three-year bonds, with a coupon rate of 6.25%.
