Adani secures $3.5bn refinancing from global banks

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Indian tycoon Gautam Adani has secured a $3.5bn refinancing package from 10 international banks, showing his industrial conglomerate retains the backing of lenders after it was the target of fraud allegations.

Lenders including Barclays, BNP Paribas and Deutsche Bank acted as arrangers and bookrunners on the refinancing, while DBS Bank, First Abu Dhabi Bank, Mizuho Bank and MUFG Bank also underwrote the three-year loan.

The Adani Group, an empire that includes India’s biggest commercial port operator and seven airports, has managed to maintain good relationships with financiers after New York-based Hindenburg Research accused it of stock market manipulation and accounting fraud in late January.

The group strongly denied the allegations but lost $150bn of market value at the lowest point of a trading rout.

“This showcases Adani’s robust access to the global financial market and strong liquidity position,” the group said in a statement.

Adani and its bankers have spent months working out a deal to refinance a $3.5bn short-term loan it took as part of its $10bn acquisition of Swiss building materials group Holcim’s two India assets last year, which made Adani one of the country’s biggest cement producers.

That international loan was crucial to Adani beating bidders that included Kumar Mangalam Birla’s UltraTech Cement and Sajjan Jindal’s JSW Group.

Adani’s expansion into cement comes as India’s government increases capital spending to improve infrastructure from transport to logistics in the world’s most populous country.

After the Hindenburg attack, the Adani Group moved to pay off $2.65bn of share-backed loans, which had been affected by the fall in prices at listed Adani businesses. It has also said it is working to bring down group companies’ debt-to-earnings ratios.

Ambuja and ACC — the companies Adani bought from Holcim last year — are prized cash-generating assets. The group confirmed that dividends from the companies would be paid out to Mauritius-based vehicle Endeavour Trade and Investment, the holding company, which will service the loan.

Endeavour was used to buy Holcim’s shareholdings. The entity’s ultimate beneficial owner was disclosed in filings last year as Gautam Adani’s brother Vinod and his wife Priti, who are not part of Adani’s management. However, Adani also said in filings that Endeavour “belongs to the Adani Group”.  

The group added another asset to its cement portfolio this year, buying Indian company Sanghi Cements in a $600mn deal.

“Adani Cements is back on their growth path through organic and inorganic initiatives,” said Satyadeep Jain, an analyst who covers the cement sector at Ambit Capital, citing the Sanghi deal and capacity expansion plans.

The refinancing comes in a heated political environment, with India’s main opposition party Congress promising to investigate the Adani Group if it wins office next year.

“It appears the banks are supremely confident that there will be no political upheavals,” said Hemindra Hazari, an independent analyst.