Adani Group Secures Financing Deal with Indian Banks

01 Feb 2024

In a significant financing endeavor, the Adani Group has finalized a mammoth funding arrangement worth approximately $8.1 billion with a consortium of Indian public and private sector banks, spearheaded by the State Bank of India. The funds are earmarked for several key infrastructure ventures, including green hydrogen initiatives, a copper smelter unit, power generation, transmission, and road projects.

The consortium comprises five Public Sector Banks (PSBs) and three prominent private sector banks. Approximately 56 percent of the total loans will originate from state-owned banks, with the remainder secured from private lenders. Additionally, two finance institutions specializing in the power sector are also involved in the financing arrangement. The loans are being secured at interest rates ranging from 9 to 11 percent.

While a portion of the funding has already been secured, the complete arrangement is expected to be finalized by May, with disbursement planned throughout 3 to 5 years.

This significant funding initiative marks a departure from Adani Group's usual approach, which predominantly relied on international banks and overseas bond markets for its financing needs, particularly in the wake of allegations of fraud and mismanagement made by Hindenburg Research in January of the previous year.

The bulk of the funds raised will be allocated to the ambitious green hydrogen project, with an initial phase expected to have a capacity of 1 million tonnes by FY27. Approximately $3.2 billion has been earmarked for establishing the green hydrogen ecosystem, envisioning an investment of around $50 billion over the next decade to produce 3 million tonnes of hydrogen.

Moreover, a substantial portion of the financing, approximately $1.3 billion, will be channeled into road projects, while $1.1 billion is allocated for a $1.2-billion, 1-million-tonne copper project, the first phase of which is slated to commence operations next month. Adani Group's transport and logistics division also plans to bolster its position in the road business, aiming to be among the top three players by 2025, leveraging its existing road network spanning 5,000 kilometers.

The remaining funds will be directed towards augmenting power and transmission assets, as well as facilitating the commissioning of a 2-million-tonne coal-to-PVC project in Mundra, with the initial phase set to be operational by FY26.

Last year, Jugeshinder Singh, the Group CFO, outlined Adani Group's ambitious investment blueprint, signaling intentions to allocate approximately $84 billion over the ensuing decade towards various ventures and projects.

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