Mumbai: Adani group is preparing to raise as much as $2 billion by selling dollar-denominated bonds as it seeks to refinance a bulk of its local debt and diversify its creditor base.

Adani group companies that are planning to sell dollar bonds include Adani Transmission Ltd, which is aiming to raise between $750 million and $1 billion, and its unit, Adani Electricity Mumbai Ltd, which is looking to raise as much as $500 million, said a person aware of the plans. The group’s renewable energy arm, Adani Green Energy Ltd is also in the process of raising up to $500 million through bonds, the person said.

“The proposed bond issuances by the Adani group companies will be used to repay domestic debt of the company. They have been active in the dollar bond market this year, with three issuances earlier this year, all of which were oversubscribed and hence they are looking to tap this demand for their other group companies too," said the person cited above, who declined to be named.

The proposed fund raising will happen on the back of a robust response to recent bond offerings totalling about $1.9 billion by the Gautam Adani-controlled conglomerate.

In July, Adani Ports and Special Economic Zone Ltd raised $650 million to buy back bonds of a similar amount, which were due next year, and in June, it raised $750 million through a separate bond sale. In May, Adani Green Energy raised $500 million through an offshore bond offering.

Adani group’s renewed bond sale plans mirror those of other Indian companies that tapped the offshore bond market this year, after tepid fund-raising activity in 2018. Last year, these companies raised $6.3 billion by selling dollar-denominated bonds, a 51.7% decline from the previous year, according to data from Refinitiv.

While IndusInd Bank Ltd raised $400 million in April, State Bank of India raised $1.25 billion through overseas bonds in January. GMR Hyderabad International Airport Ltd also raised $300 million through bonds in the offshore market to refinance the debt of its parent GMR Infrastructure Ltd. Renewable energy firm ReNew Power Ltd, too, has raised close to $700 million through two bond offerings. On 24 September, JSW said it has raised $400 million through dollar bonds for capital expenditure and other purposes. Adani Transmission has hired Standard Chartered Bank to advise on its bond offering, Mint reported on 12 September.

(Graphic: Sarvesh Kumar Sharma/Mint)
(Graphic: Sarvesh Kumar Sharma/Mint)

A second person, who also requested anonymity, said a key factor behind raising dollar debt is to help the Adani group free up credit lines with domestic lenders.

“From a cost perspective, while interest rates are low, once you add the hedging costs, the (overseas borrowing) rate comes close to what you are paying here. But, apart from the cost, the bigger benefit is diversifying capital sources," the person said. “A lot of the large lenders already have a significant exposure to the group and thus have little headroom for further lending. By refinancing these domestic loans with the dollar bonds, they will be able to free up existing lines for raising debt for new projects," he said.

A spokesperson for the Adani group said it won’t comment on speculation.

As on 31 March, Adani Transmission had a net outstanding debt of 17,900 crore, according to its investor presentation, comprising rupee and dollar bonds, masala bonds, commercial paper and external commercial borrowings. Adani Green Energy’s debt stood at 9,771 crore as of 31 March, while Adani Electricity Mumbai had a debt of 8,246 crore.

Adani Transmission is India’s largest private transmission company with a cumulative transmission network of around 14,217 circuit km, of which 11,348 ckt km is operational.

Adani Green had an operating renewable asset base of 2.02 gigawatts as of September 2019. Adani Electricity serves over 3 million customers in Mumbai and has a generation capacity of 500MW.

Close