Indian billionaire Gautam Adani’s group is looking to raise at least $10 billion in new debt over the next year as his conglomerate seeks to refinance high-cost loans and finance future projects, according to people familiar with the plans.
Using various instruments including foreign currency debt and green bonds, the Adani Group plans to raise up to $6 billion to swap existing high-interest debt for lower-cost loans and use the rest to finance projects, one of the people said, asking not to be identified. as the information is private. The effort could begin as early as the ongoing December quarter, the people said.
The move aims to reduce the port-to-power group’s overall repayment burden, which has come under fire as Asia’s richest man pursues a string of ambitious acquisitions to diversify into sectors such as green energy, digital services and media.
Even as interest rates rise globally, the conglomerate is confident of obtaining low-cost loans given its larger asset base now, the people said. The timing of this fundraising effort, however, may 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.
India’s Mint newspaper reported earlier this month that Adani and his family were in early talks with investors including Singapore’s GIC Pte and Temasek Holdings Pte to raise at least $10 billion to fund the conglomerate’s expansion into clean energy and ports. Adani Group has not publicly commented on this report.
Adani’s rapid pace of expansion — the $6.5 billion acquisition of Indian unit Holcim Ltd. in May made the company the second largest cement producer in the local market — has raised concerns over the group’s high leverage ratio. Although the company has consistently defended its debt levels as “healthy”, this effort to ease borrowing costs underscores its need to avoid becoming, or perceived as becoming, too long.
Adani Green Energy Ltd. saw strong demand for its debut offering last September, receiving orders of more than $3.5 billion for an issue of just $750 million. But macroeconomic pressures have grown stronger since then.
Replacing dollar debt becomes more expensive for Indian firms
Dollar-denominated funding costs have risen over the past two months, according to Bloomberg’s index of India’s dollar-denominated corporate and semi-sovereign bonds, including those of Adani. The relative cost of swapping old debt for new is now the highest since the global financial crisis.
Adani’s bond yields have soared this year, as dollar borrowing costs have risen and are well above disputed levels. That suggests companies may have to pay a premium to borrow now.
For example, the 2029 bond issued by Adani Ports currently yields 9.4%, more than double the disputed rate. The yield on Adani Green’s 2024 bond has tripled since it was sold, data compiled by Bloomberg showed.
Raising low-cost debt in a tough market will test the group’s mettle and goodwill with investors and bond lenders. The flagship is already looking, however, 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 gave the proposed issue an A+ score.
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