Adani in Talks With Global Banks for $3.5 Billion Loan

India-based Adani Group is in talks with global banks to refinance a $3.5 billion loan. If it finalises, it will become Asia’s one of the most significant syndicated loans in a year. Adani Group, led by billionaire Goutam Adani, is looking at refinancing options for a debt taken by the group to purchase Ambuja Cement.   

Loan Categories and Lenders

The port-to-power company is in negotiation with several banks to refinance a $3.5 billion loan. The lenders for the deal are categorised into three groups. DBS Group Holdings Ltd., First Abu Dhabi Bank PJSC, Mizuho Financial Group Inc., Mitsubishi UFJ Financial Group, Inc., and Sumitomo Mitsui Banking Corp., each committing to offer $400 million to the transaction. The remaining amount will be continued by other smaller banks. As a part of the ongoing negotiation, Adani would repay around $300 million to the original Ambuja facility. Initially, Adani was looking to refinance the entire $3.8 billion loan incurred during the acquisition of Ambuja Cement. 

Hindenburg Report and Road to Recovery 

The market considers the loan negotiation a sign of recovery for the Adani Group. The company faced hardships earlier this year when the American short-seller Hindenburg Research accused the firm of manipulating share prices. The report caused around $150 billion to be wiped off the company’s shares at one point. However, since Adani, firms have increased their activities in the capital market. In July, the group’s flagship company, Adani Enterprise, raised nearly $12.5 in local-currency bonds. 

It is also reported that veteran investor Rajiv Jain’s GQG Partners LLC has purchased a stake in group firms through several bulk deals. GQG has doubled down their holdings in five Adani companies- Adani Enterprises Ltd, Adani Ports, Adani Green Energy Ltd, Adani Transmission Ltd and Ambuja Cements. The total value of their investment now stood at ₹26,000 crore. Company chief Rajiv Jain has said that GQG will become one of the largest investors in the group in the next five years. GQG partners have purchased an 8.1% stake in Adani Power through multiple block deals on August 16 and have also raised their stakes in Adani Ports And Special Economic Zone Ltd. to 5.03%. 

Adani Enterprise Q1 Reports 

During the first quarter of the current fiscal the company reported a profit of ₹673.93 crore, registering a 43.55% increase from the same quarter last year. However, their net profit has dropped by 6.72% for the same period. Their total income, which includes revenue from operations and other income, was ₹25,809.94, which is significantly lower (37.15%) compared to the year-ago period.   

The company’s EBITDA, which is earnings before interest, taxes, depreciation, and amortisation, has increased by 47% to ₹2,896 crore in Q1 of FY24 due to strong operation growth.

There is also a slight growth in the net profit margin of 2.62% compared to 1.14% in the same period last year. However, there is a significant rise in operational margin, which stood at 9.92%. In the same period last year, the operational margin was 4.27%. 

About Adani Group

The Adani Group is one of India’s largest and most prominent conglomerates, with diversified business interests spanning various sectors. Founded by Gautam Adani in 1988, the group has rapidly expanded its footprint both within India and internationally.

The Adani Group’s core sectors include energy, infrastructure, logistics, agribusiness, and resources. In the energy sector, they are a significant player in power generation, transmission, and renewable energy sources like solar and wind power. Their infrastructure projects encompass airports, ports, and roads, contributing to India’s economic growth and connectivity.

Adani Group is also involved in logistics through Adani Ports and SEZ, operating several major ports in India, making them an integral part of the country’s trade network. Additionally, their businesses extend into agribusiness, where they deal with the import and distribution of food commodities and resources, including coal mining and exploration.

Adani acquired Ambuja Cement in 2022. They pledged the entire stake of Ambuja Cement and ACC Cement for $12.5 billion to foreign banks to fund the acquisition of the two cement companies worth $6.5 billion. The transaction was funded by a loan of $4.5 billion from 14 foreign banks, including Barclays Bank Plc and Deutsche Bank AG.

Final Words

The translation is not yet finalised, and the terms may change. However, if the deal closes, it will be the fourth-largest syndicated loan in Asia outside Japan this year. If you want to get more daily dose of your market news, follow our blogs. If you are an investor and interested in investing in Adani stocks, Angel One offers a free Demat account opening within 5 minutes. Start your investment journey with confidence with our hassle-free, synchronised Demat account!

Disclaimer: This article has been written for educational purposes only. The securities quoted are only examples and not recommendations.