Ahmedabad: The upcoming public issue of non-convertible debenture by Adani Enterprises could be the first of many across the ports-to-edible oil Adani group as it eyes a diversified borrowing matrix over the coming decade.
The ₹800 crore issue—a rare public bond issue by an Indian conglomerate and Adani Group’s first—is a drop in the ocean compared to the Adani group flagship company’s nearly ₹57,000 crore in gross borrowings.
The key purpose of the issue is to test and develop a domestic debt capital market for corporates, said Jugeshinder Singh, Adani Group’s chief financial officer.
“Today, from an investment perspective, we don't have a requirement for this,” Singh told Mint in an interview on the sidelines of a roadshow here.
“But from the funding structure point of view, we want to have a certain capital funding profile over the next 10 years,” he said.
The allocation across different investor classes for the issue indicates the company’s intentions of tapping individual investors over institutions. About 60% of the issue is earmarked for individuals, split equally between retail and high net worth individual (HNI) categories. Another 30% is reserved for non-institutional corporate investors, while only a tenth of the issue will be offered to institutions like mutual funds and insurance companies.
While the group has not set any targets for debt allocation across different avenues, domestic debt capital markets could easily make up 5-10% of the borrowings of Adani Group companies, Singh said. It could go up to even 15%, depending upon the depth of the market, he said.
“It will largely depend on what longer term risk profile will emerge for each business, and that will then determine their capital structure,” he said.
The Adani Group’s debt profile has evolved significantly over the past eight years. Public sector banks, which accounted for more than half of the group’s borrowings, have seen their share dip to just about an eighth of the pie as of March 2024. The exposure to borrowings from international banks has gone up to 28% from nil over the same period.
Bond issuances have also ramped up sharply, with debt exposure to bonds more than doubling to 31% as of March 2024.
The Adani Group is betting on the growth of energy and logistics in India—sectors which rely heavily on patient debt capital. This results in a large exposure to overseas lenders, which brings with it the risk of high volatility. This is demonstrated by the surge in global interest rates over the past couple of years led by a hawkish US Federal Reserve. Some Indian companies with large exposure to overseas debt struggled to refinance maturing facilities during this period as global capital prioritized developed markets over risky emerging market investments.
Singh said that the Adani Group wants to tap into unmonetized domestic capital sitting in assets like gold and land.
“India roughly has 2-3 times its gross domestic product in its financial assets. Therefore, there is a large (amount of) capital that can be monetized,” he said.
Known to tout a patriotic stance on corporate strategies, Singh underscored the geopolitical importance of tapping into domestic capital. The monetary benefits of investing in the growth in India’s infrastructure must accrue to Indians, and not foreign investors, he said.
“What took the US 200 years to build, we will do that in 25 years,” he said. “So, either the future generation will look at us and say when the opportunity came, we had the courage to look it in the eye. Or, that we were part of the same generation that brought India to its knees in 1990s,” he said, adding that he believes it will be the former.
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