Adani Group has more lenders than before: Who are they
It wasn't that long ago when US-based short-seller Hindenburg Research raised questions about Gautam Adani-led Adani Group's sky-high debt. To counter the explosive report and win back investor confidence, the conglomerate went on a debt-prepaying spree. Now, three months after the report, let's take a look at where the crisis-hit company's debt currently stands and who its key lenders are.
Why does this story matter?
The high-flying Adani Group was abruptly brought to the ground by the Hindenburg report, which accused the conglomerate of stock manipulation, accounting fraud, and more. The report was a massive setback to the apple-to-airport conglomerate's aspirations. Many questions were raised about its ability to repay debts and raise capital. Are lenders now more comfortable with the group?
Debt stood at Rs. 2.27 lakh crore in March
As of March 31, Adani Group's debt stood at Rs. 2.27 lakh crore. Of the total debt, 39% is in bonds, 29% is with global banks, and the remaining 32% is financed by PSUs, private banks, and NBFCs. It is interesting to note that the conglomerate's remaining debt is close to what it repaid in the March quarter. It paid back about $3 billion.
The conglomerate is over-levered: Aswath Damodaran
Adani Group's ambitions have always been powered by debts. Not many are fans of doing business this way. Earlier this year, valuation guru Aswath Damodaran said the conglomerate carries three times more debt than it should. He, however, called it a "bad business practice" and "not a con." The group has repeatedly said it is fully capable of repaying debts.
The number of lenders increased to 25
After the Hindenburg report, many investors sold Adani stocks. However, that does not seem to have affected the conglomerate. The group's lender base has increased from 18 to 25. It is also talking to more financial institutions as part of investor outreach. The list of lenders includes two American banks, three European banks, and three Japanese lenders.
Adani Group is in talks to raise $800mn
Meanwhile, the conglomerate is in talks to raise around $800 million for new green energy projects. Adani Group is in talks with global banks, including, Sumitomo Mitsui Banking Corp., DBS Bank Ltd., Mitsubishi UFJ Financial Group, and Standard Chartered to raise funds. If banks agree to fund the project, it could indicate banks are more comfortable lending to the group.
