Mumbai: Billionaire Gautam Adani-promoted Adani Ports And Special Economic Zone Ltd on Wednesday launched a $750-million offshore bond sale to repay existing loans and finance capital expenditure, two people aware of the development said.
“The book was opened on Wednesday morning and is expected to close by midnight of 26 June," said one of the two people cited above. Both persons spoke on the condition of anonymity.
The funds will be used for capital expenditure, including on-lending to subsidiaries to meet their capital expenditure needs, as well as for repaying existing debt, this person added. Investment banks Bank of America Merrill Lynch, Standard Chartered Bank, Citi, JP Morgan, Barclays and others are managing the offering.
“The US dollar-denominated bonds are priced at a mark-up of 265 basis points over the 10-year US benchmark yield," the person cited above said. As of 25 June, the US treasury benchmark yield was trading at 198 basis points, Bloomberg data shows.
The bond issue comes after several other Indian firms tapped into the offshore bond market this year, after tepid fundraising activity in 2018. Last year, Indian companies raised $6.3 billion through dollar denominated bonds, down 51.7% from a year ago as the number of issuances more than halved, according to data from Thomson Reuters.
Companies that have tapped the offshore bond market this year include IndusInd Bank Ltd, which in April raised $400 million (around ₹2,700 crore) through a benchmark three-year issuance, at a coupon rate of 3.875% per annum. In January, India’s largest lender, State Bank of India, raised $1.25 billion through bonds issued abroad. Recently, GMR Hyderabad International Airport Ltd also raised $300 million through bonds in the offshore market to refinance debt of its parent firm, GMR Infrastructure Ltd, while renewable power producer ReNew Power Ltd raised $375 million through dollar-denominated green bonds.
Adani Ports claims to be the country’s largest port developer and operator with a 21.2% market share of port capacity. The company has nine ports in operation, of which two are under development and three are Inland Container Depots located in ten locations across east, west and south coasts of India, according to a recent investor presentation.
Adani Ports is estimated to have a capital expenditure plan of ₹2,500-2,800 crore annually over fiscal years 2019-21 on account of its capacity expansion plans for Mundra, Kattupalli and Dhamra ports to boost cargo volumes, according to a September 2018 Icra note. In 2016, the company had also started construction at the Vizhinjam port project in Kerala in a public-private partnership at a total project cost of ₹4,168 crore, 40% of which will be funded by the government as viability gap funding, Icra added.
The company reported an 18% rise in its debt to $3.9 billion in fiscal year 2019, compared with $3.3 billion a year ago, according to data disclosed by the company. The port operator’s profit for the year remained almost flat at $579 million in FY19, compared to $573 million in FY18.
An email sent to Adani Ports did not elicit any response.
On Wednesday, shares of Adani Ports closed at ₹415, up 2.3% on the BSE, while the benchmark Sensex closed at 39,592.08 points, up 0.4%.