Adani faced margin call on $1.1bn loan before repaying in full

Gautam Adani, whose Indian business empire is under pressure over fraud allegations, repaid a $1.1bn share-backed loan last week after facing a margin call of more than $500mn, according to four people with direct knowledge of the matter.

They said the repayment was designed to avoid further damage to investor confidence in the group.

Adani’s empire, which spans airports to energy, has been reeling since New York-based short-seller Hindenburg Research last month accused it of accounting fraud and stock price manipulation. The Adani group has denied the claims.

The lenders of the $1.1bn loan, which included Barclays, Citigroup and Deutsche Bank, requested last week that the billionaire top up the amount of stock pledged against the loan after a sharp fall in the shares of the listed Adani companies, according to the people with knowledge of the matter.

Since the allegations were published on January 24, the sell-off in the listed businesses had at one point knocked Rs9.4tn ($114bn), or about 50 per cent, off their value.

As the shares continued to slide, Barclays informed Adani of a margin call equivalent to 50 per cent of the loan in cash, said the people, who spoke on condition of anonymity.

Rather than post cash against the loan, which did not mature until September 2024, the Adani Group’s founder and his family opted to repay it completely. Adani has not disclosed the source of the funds used to repay the loan.

Adani Group said it did not receive a formal request for a margin call.
The full loan was repaid early “per our prepayment planning”, the company added.

As it seeks to arrest the crisis, the indebted group has moved to dispel fears that it is under pressure to cover losses on margin loans. It has dismissed claims circulating in Indian media to that effect as “market rumours”.

On Monday, Adani announced the early repayment of the loan in full, casting it as a proactive move to reduce leverage.

Adani declined to specify which corporate or personal entity was the borrower on the $1.1bn loan, but referred the Financial Times to a statement released this week that said the prepayment was “in continuation of the promoters’ commitment to reduce the overall promoter leverage”. In India, promoters refer to founders or the people controlling a company.

Other banks in the lending group included JPMorgan and Japan’s SMBC Group. All the banks declined to comment.

The early repayment has had a “calming effect” and eased internal pressures at international lenders, which are facing demands from their credit and risk management committees to reduce their exposure to the conglomerate, one of the people said.

Adani said the repayment would release 168mn shares in Adani Ports, 27mn in Adani Green Energy, and 12mn in Adani Transmission.