Barclays Plc, Standard Chartered Plc and Deutsche Bank AG are among the banks that have lent Adani $4.5 billion to finance the purchase of Holcim srl assets last year. A portion of that loan expires on March 9.
The lenders were in talks to refinance the loan up to a week before the critical report Hindenburg research has been published, according to people familiar with the matter. Those negotiations stalled after reports of alleged fraud led to a massive sell-off, chilling banks’ willingness to refinance, the people said, asking not to be identified discussing a private matter.
The development is the first concrete sign that global banks are becoming more cautious about funding the Adani empire and coincides with comments from France’s TotalEnergies SE that a multibillion-dollar plan to produce green hydrogen with the Indian tycoon has been put on hold, pending of his conglomerate’s audit. MSCI Inc said Wednesday it would review the suitability of certain Adani stocks in its widely-watched benchmark indices, as leading asset managers in Japan are stepping up disclosures about funds with exposure to Adani, signs of fickleness among international investors that could dampen a nascent rally in Adani shares.
An Adani spokesman said the conglomerate was in talks with banks to refinance part of the loan, but the group plans to pay it off early. The spokesman said discussions with the banks have not stopped.
Representatives from Barclays and Deutsche Bank declined to comment. A representative for Standard Chartered was not immediately available.
This marks the second time in a week that the group has taken steps to pay off debt early as it struggles to regain investor confidence and stem the stocks’ rout. Billionaire Gautam Adani and his family have prepaid $1.11 billion in equity-backed loans, the group said on Monday.
While he’s positive that the group is able to pay off those bonds, he also points out that soaring yields on Adani debt since the Hindenburg report would make refinancing those bonds prohibitively expensive, among other challenges. The repayments also raise questions about how much of the companies’ cash could be used to pay off its debt without refinancing.
International control
Global banks are stepping up their scrutiny of the group following the Hindenburg report. The equity arm of Citigroup Inc. has stopped accepting Adani securities as collateral for margin loans, following a similar move by Credit Suisse Group AG.
The corporate empire of Adani, once the second richest person in the world, has gone haywire after the Hindenburg report on alleged illegal practices. Ten Adani Group companies, including Adani Total Gas Ltd., Adani Enterprises Ltd. and Adani Transmission Ltd., at one point wrote off more than $100 billion from their combined market value during the fire sale.
Hindenburg said a network of offshore shell entities controlled by the Adani family in tax havens has been used to facilitate corruption, money laundering and theft of taxpayers. The conglomerate called the report “false” and threatened legal action. Adani gave a video speech last week stating that the group’s balance sheet is healthy.
Shares of Adani Group rallied this week after debt payments and as traders filled short positions. Seven of the group’s 10 stocks moved higher in Wednesday’s session, with flagship Adani Enterprises up 20% after the highest gain since 2020 the previous day. The stock has more than doubled from its low during the recent selloff.
