Adani Group in talks with foreign banks to raise $4.5 billion


Adani Group in talks with foreign banks to raise $4.5 billion

New Delhi: The Adani Group, led by billionaire industrialist Gautam Adani, is seeking to raise up to $4.5 billion through a combination of overseas lending instruments and is discussing the same with more than one dozen foreign banks. This will be one of the largest loan fund raisings by an Indian company in foreign currency.
The latest development comes nearly a month after the group acquired the local business of cement maker Holcim in India’s biggest cement takeover.
The loan structures offered by the Adani Group include mezzanine financing, equity-backed bridge loans to be repaid in cash and an 18-month senior debt facility, according to several bankers with knowledge of the matter cited by Economic Times.

The last of these structured instruments could be refinanced later either by a long-term bond or by a loan. It may be noted here that permanent instruments such as bonds offering pre-specified coupons are usually sold abroad to raise large amounts of liquidity.

Some of the banks involved in talks with the group include BNP Paribas, Citi, JP Morgan, MUFG, Mizuho Bank, SMBC as well as some of the Middle East-based lenders.

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The Adani Group plans to use the funds generated from the latest fundraising to partially finance the acquisition of Holcim’s stakes in Ambuja Cements and ACC. All financing lines were previously underwritten by Deutsche Bank, Barclays and Standard Chartered Bank. These are now split, with other banks also participating in the transactions.

The senior debt facility will likely raise up to $3 billion, while the mezzanine line could raise $1 billion. The bridge loan, with a term of one to three years, is set at $500 million and would be repaid in cash.

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Mezzanine financing is a combination of debt and equity financing that allows the lender to convert debt into equity in the event of default.

Meanwhile, the Adani Group is researching the lending capacity of each bank, each lending between $200 million and $500 million. “Adani Group is looking to expand syndication initially limited to just three banks,” shared an executive involved in the process.

The Adani-led group is buying the two companies for $10.5 billion and plans to bring in $3 billion as developer equity. Holcim holds a 63.19% interest in Ambuja Cements and 54.33% in ACC through its subsidiaries.

Open offers for Ambuja Cements and ACC shareholders will begin on July 6 and close on July 19.


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