Adani Enterprises returns to bond market, raises Rs. 1,250 crore
Six months ago, a scathing report by Hindenburg Research rocked the Adani Group. It hasn't been business as usual since then for the once high-flying conglomerate. However, it has been showing signs of recovery. Now, Adani Enterprises, the group's flagship company, has returned to the Indian corporate bond market. It is the company's first foray into the bond market since the Hindenburg report.
Why does this story matter?
The Hindenburg report was a massive blow to the Adani Group. The US-based short-seller accused the conglomerate of accounting fraud, improper governance, and stock manipulation using offshore companies. The report was followed by a massive sell-off of the group's stocks, affecting Adani Group's securities. Adani Enterprises's re-entry into the bond market suggests that investors are again optimistic about the conglomerate.
Adani Enterprises didn't disclose why it raised funds
Adani Enterprises raised Rs. 1,250 core through the private placement of non-convertible debentures (NCD). According to data from the National Securities Depository Ltd., the bonds have a term of three years and an annual coupon of 10%. The company disclosed the fundraising through a stock exchange filing. It, however, did not state the purpose of raising the fund.
The bonds have a higher spread
The bonds have a spread of nearly 300 basis points over comparable government bond yield, indicating the risk associated with the bonds. The bonds will pay interest annually in contrast to semi-annual government bonds.
The spread was 140 basis points in September 2022
The last time Adani Enterprises raised funds through private placement of bonds was in September 2022. At the time, the conglomerate was at its peak, which is evident from the spread and yield of bonds. The bonds had an 8.4% yield for 17 months and were 140 basis points above comparable government bonds. In January, the bonds had a spread of 210 basis points.
Adani Group is improving its liquidity cushion
Adani Group has been busy raising funds to improve its liquidity cushion to help with expansion and debt repayment. It seems the new funds are for the same reason. The group recently raised $1.38 billion through the sale of stakes in Adani Enterprises, Adani Green Energy, and Adani Transmission. Adani Group's promoters plan to reduce their share in group companies even further.
