SBI to finance Adani’s Australian coal projects
COAL & MINING

SBI to finance Adani’s Australian coal projects

Adani Enterprises Ltd's Australian mining company, now renamed Bravus Mining & Resources, is set to receive a Rs 5,000 crore loan from State Bank of India (SBI). 

The loan agreement between the Adani Group and SBI is nearly completed, and the bank's executive committee is expected to give ratification soon, as per media reports.

Adani and SBI entered into a memorandum of understanding (MoU) in 2014 for a $1 billion (approximately Rs 743 crore) loan. After it became a political controversy, the loan was not executed. The new arrangement could mark an earlier controversy’s resurgence.

At a time when the mining project was mired in controversy, opposition parties had questioned the loan agreement.

Specifying a decline in coal mining in Australia, the opposition had pointed out that five leading global banks, Deutsche Bank, Citibank, HSBC, Barclays, and Royal Bank of Scotland, had declined to fund the project.

Stating that it was only an MoU and no money had been lent to the company, SBI had then gone back on the loan agreement. Sources quoted by media reports said that there is a better understanding of the future of the project six years and that the concerns raised in 2014 are no longer valid.

According to data from Dealogic, Adani Group's total outstanding debt came to more than $30 billion as of November 11, including $22.3 billion in loans and $7.8 billion worth of bonds. Among Indian conglomerates, high debt is nothing new but the Adani Group has raised concern with its rapid expansion. 

In a 2015 "House of Debt" report, Credit Suisse warned that the Adani Group was under "severe stress" that accounted for 12% of banking sector loans as one of 10 conglomerates. Yet, by borrowing from overseas lenders and pivoting to green energy, the Adani Group has been able to keep raising funds.

The report said that both at home and overseas, the group continues to enjoy ample access to capital, and despite highly leveraged balance sheets, it can tell investors that it has never defaulted on a loan.

Adani Gas sold a 37.4% stake to weather the shock of the pandemic when it hit, giving it ample cash flow to total for a reported $600m, and Adani Group companies tapped international debt markets with more than $2 billion bond sales.

Adani announced a strategic collaboration in biogas and hydrogen with Italian gas and infrastructure group Snam, earlier this month. To partner with the group, international groups are queuing up.

Adani Enterprises Ltd's Australian mining company, now renamed Bravus Mining & Resources, is set to receive a Rs 5,000 crore loan from State Bank of India (SBI).  The loan agreement between the Adani Group and SBI is nearly completed, and the bank's executive committee is expected to give ratification soon, as per media reports. Adani and SBI entered into a memorandum of understanding (MoU) in 2014 for a $1 billion (approximately Rs 743 crore) loan. After it became a political controversy, the loan was not executed. The new arrangement could mark an earlier controversy’s resurgence. At a time when the mining project was mired in controversy, opposition parties had questioned the loan agreement. Specifying a decline in coal mining in Australia, the opposition had pointed out that five leading global banks, Deutsche Bank, Citibank, HSBC, Barclays, and Royal Bank of Scotland, had declined to fund the project. Stating that it was only an MoU and no money had been lent to the company, SBI had then gone back on the loan agreement. Sources quoted by media reports said that there is a better understanding of the future of the project six years and that the concerns raised in 2014 are no longer valid. According to data from Dealogic, Adani Group's total outstanding debt came to more than $30 billion as of November 11, including $22.3 billion in loans and $7.8 billion worth of bonds. Among Indian conglomerates, high debt is nothing new but the Adani Group has raised concern with its rapid expansion.  In a 2015 House of Debt report, Credit Suisse warned that the Adani Group was under severe stress that accounted for 12% of banking sector loans as one of 10 conglomerates. Yet, by borrowing from overseas lenders and pivoting to green energy, the Adani Group has been able to keep raising funds. The report said that both at home and overseas, the group continues to enjoy ample access to capital, and despite highly leveraged balance sheets, it can tell investors that it has never defaulted on a loan. Adani Gas sold a 37.4% stake to weather the shock of the pandemic when it hit, giving it ample cash flow to total for a reported $600m, and Adani Group companies tapped international debt markets with more than $2 billion bond sales. Adani announced a strategic collaboration in biogas and hydrogen with Italian gas and infrastructure group Snam, earlier this month. To partner with the group, international groups are queuing up.

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