Indian billionaire Gautam Adani’s group aims to raise at least $10 billion in new debt over the next year as his conglomerate looks to refinance its expensive loans and fund future projects, according to people familiar with the plans.
Using multiple instruments, including foreign currency debt and green bonds, the Adani Group plans to raise up to $6 billion to exchange its existing high-yield debt for lower-cost loans and use the rest for project financing, said one of the people, who will not be identified early because the information is private. Efforts could begin as early as the current December quarter, people said.
The move aims to reduce the overall repayment burden of the port-to-power group, which has come into the spotlight as Asia’s richest person pursues a series of ambitious acquisitions to diversify into sectors such as green energy. , digital services and media.
Despite rising interest rates worldwide, the conglomerate is confident it can now get cheaper loans thanks to its larger asset base, the people said. However, the timing of this fundraiser could change depending on global market conditions, they said.
An Adani Group representative declined to comment on the fundraising plan.
The debt increase is separate from the company’s plans to explore strategic equity investments in the group, the people said.
Indian newspaper Mint reported earlier this month that Adani and his family are in talks with investors, including Singapore’s GIC Pte and Temasek Holdings Pte, to raise at least $10 billion to help expand the conglomerate’s expansion into clean energy and ports. finance. The Adani Group has not publicly commented on this report.
Very fast
Adani’s blazing pace of growth – its acquisition of Holcim Ltd.’s $6.5 billion Indian units in May made the company the second-largest cement producer in the local market – has raised concerns about the increased leverage ratios of the Adani company. group. While the company has consistently defended its debt levels as “healthy,” this effort to ease borrowing costs underscores the need to avoid getting too long or seen as getting too long.
Adani Green Energy Ltd. saw strong demand for its debut offering last September, taking orders in excess of $3.5 billion for an issue of just $750 million. But since then, macroeconomic headwinds have become much stronger.
Replacing dollar debt becomes more expensive for Indian companies
According to a Bloomberg index of Indian dollar-denominated corporate and quasi-government bonds, including Adani companies, dollar borrowing costs have skyrocketed in the past two months. The relative cost of swapping old debt for new is now the highest since the global financial crisis.
Adani bond yields have risen sharply this year as dollar borrowing costs rise and are well above issuance levels. That suggests the companies may have to pay a premium to borrow now.
Difficult market
For example, the 2029 bond issued by Adani Ports now yields 9.4%, more than double the interest rate currently outstanding. The yield on Adani Green’s 2024 bond has tripled since its sale, data collected by Bloomberg shows.
Attracting cheaper debt in such a tough market will test the group’s courage and goodwill with bond investors and lenders. However, the flagship is already looking to test the waters.
Adani Enterprises Ltd. is planning an initial bond sale of 10 billion rupees ($121 million) to individual investors, according to a statement this week from Care Ratings, which awarded an A+ rating for the proposed issuance.
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