India's Adani secures $3 bn credit from sovereign wealth fund

The credit line from the sovereign wealth fund could be increased to $5 billion

Published : 2 March 2023, 00:43 AM
Updated : 2 March 2023, 00:43 AM

India's Adani Group has told creditors it has secured a $3 billion loan from a sovereign wealth fund, two sources with knowledge of the matter said, as the embattled conglomerate seeks to ease debt concerns after a short-seller attack.

The credit line from the sovereign wealth fund could be increased to $5 billion, the sources said, citing a memo that was circulated to participants as highlights of a three-day investor roadshow that ended on Wednesday.

The identity of the sovereign wealth fund was not disclosed in the memo. A third person familiar with the matter said Adani's management told investors it was from the Middle East.

The sources declined to be identified as they were not authorised to speak with media. A spokesperson for Adani did not immediately respond to a Reuters request for comment.

Shares in Adani group companies extended gains after the Reuters report - its flagship Adani Enterprises ended 14.7% higher and Adani Total Gas rose 4.9% in a broader Mumbai market that gained 0.9%.

The news of Adani securing fresh credit comes a day after group management told bondholders it expected to prepay or repay share-backed loans worth $690 million to $790 million by the end of March.

Those plans are being unveiled as the group held a fixed-income roadshow this week in Singapore and Hong Kong to shore up investor confidence amid steep share price falls and regulatory probes.

Seven listed Adani Group companies have lost more than $140 billion in market value combined since a Jan 24 report by Hindenburg Research alleged stock manipulation and improper use of tax havens, and flagged concerns over debt levels.

Adani, led by billionaire Gautam Adani, has rejected the allegations and denied any wrongdoing.

The short-seller attack has snowballed into the biggest business and reputational challenge for 60-year-old Adani, whose fortunes rose rapidly in recent years as he expanded his group's business interests.

India's banking and markets regulators, as well as the government, have launched inquiries to calm spooked investors.

A portion of the $3 billion in credit from the sovereign wealth fund, Adani management said during the last day of the roadshow in Hong Kong, has already been used to repay some of Adani's share-backed loans, one of the sources said.

The ports-to-airport conglomerate's management also sought to reassure investors that it has sufficient cash to prepay a lot of debts, including onshore bonds, and it has started doing that already, the source said.

But for offshore bonds, including some three-year US bonds, the group is not allowed by regulators to prepay and also has no plan to buy them back as it needs to maintain a certain cash level to retain credit ratings, the source added.

Adani also held calls with bondholders last month to try to assuage investor concerns, where group executives revealed refinancing plans at some of its units and also plans to completely pre-pay all loans against shares.