Gautam Adani, Chairman of Adani Group.
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While Gautam Adani received a vote of confidence from investors in his latest $2.50 public offering on Tuesday, Wall Street is still increasing his exposure to the global financial sector. bridge.
As Adani’s empire grew, his team established new relationships with foreign banks. At the same time, it has reduced the share of Indian banks in lending figures – from 86% in fiscal 2016 to 33% in 2022, according to analysts.
Indeed, Indian banks account for 0.6 percent of loans in the group’s sector, according to JPMorgan. While the number may seem low, the total investment in Adani Group is still around $9 billion, said Saurabh Kumar, an analyst at JPMorgan.
Ravi Ahuja, a professor at DeSales University, said: “Although Adani’s mounting debt is not news, the Hindenburg report has prompted investors to reconsider the Indian billionaire’s relationship. Degree with banks”.
Activist investor Bill Ackman, founder of hedge fund Pershing Square, tweeted Sunday: “There’s too much responsibility on the banks.” Ackman is talking about selling shares this week to its flagship Adani Enterprises, which reached full registration on Tuesday.
A spokesperson for the Adani Group was not immediately available for comment when contacted by CNBC.
Outside help?
Jefferies analyst Prakhar Sharma writes that for now, the risk to Indian banks is low, adding that “we don’t see a serious risk to the Indian banking sector.”
Indian banks associated with Adani Group include State Bank of India, Life Insurance Corporation, Union Bank of India, ICICI and Axis as well as others.
An official at a state-owned Indian bank, who wished to remain anonymous due to the sensitivity of the topic, said: “We don’t expect a withdrawal from the banks, but if the situation turns bad more, then outside help will be needed.” to CNBC.
Although Adani’s reliance on Indian banks has diminished over time, the capital used to launch new infrastructure projects funded by foreign banks has increased dramatically — from zero to 18% of total debt in the past six years, according to the Jefferies group in India.
According to Adarsh Parasrampuria, an analyst at investment group CLSA, “Most of the incremental funding for the group for new businesses and acquisitions has come from foreign sources.”
That includes one of Adani’s most recent deals to get Holcim Switzerland’s cement business for $10.6 billion by mid-2022. The agreement is underwritten by Barclays, Deutsche Bank, Standard Chartered and Mizuho, as well as other international banks.
Private equity has also played a prominent role. In 2021, Warburg Pincus paid over $100 million for a small stake in Adani Ports and Special Economic Zones Ltd. A spokesman for Warburg Pincus was not immediately available for comment.
Last year, Apollo Credit Fund provides $750 million loan to Mumbai International Airport, a public-private partnership between Adani Airport Holdings Ltd. (74% ownership) and Airports Authority of India (26% ownership). A spokesperson for Apollo was not immediately available for comment when contacted by CNBC.
Besides banks, existing investors On Monday, Abu Dhabi International Corporation announced plans to invest $381 million in Adani’s consortium.though not disclosing at what valuation.
In a company statement, IHC CEO Syed Basar Shueb, who is also an investor in SpaceX, said: “Our interest in the Adani Group is driven by our beliefs. and believe in the fundamentals of Adani Enterprises Ltd; we see strong growth potential from a long-term perspective and added value for our shareholders.”
The Abu Dhabi investment, coupled with an oversubscribed $2.50 public offering, halted the fall in Adani Group shares on Tuesday.
According to analysts, of the seven companies run by the Adani Group: Adani Green Energy, Adani Power and Adani Ports carry the largest net debt.
“If stock prices don’t stop, Adani may need to consider financing options, including conversations with Middle East investors looking to diversify,” said a banker in the US. Mumbai, India, who also wished to remain anonymous said. topic sensitivity, with CNBC.
accused Hindenburg
In a 413-page report on Sunday, Adani attacked short sellers Hindenburg and alleged fraud and manipulation of their stock prices. In an attempt to stoke nationalist fervor, Adani went on to argue that Hindenburg’s assessment was a “calculated attack on India.”
Hindenburg on Monday morning described the group’s response as “bloated” and stated that it “ignored any significant allegations” against the corporation that it raised.
Gautam Adani, the richest man in Asia and second only to Elon Musk, dropped from the top 10 richest people in the world to 11th place on the chart Bloomberg Billionaire Indexby the end of Monday.
— Jihye Lee of CNBC contributed to this article.
