Adani Group News: Adani Group to raise up to $4.5 billion via combination of offshore loans

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The Adani Group, which recently acquired the local operations of Holcim in India’s largest cement buyout deal, is in talks with over
a dozen foreign banks to raise up to $4.5 billion through a combination of overseas lending instruments, several bankers with knowledge of the negotiations told ET.

This will be one of the largest fundraising rounds of foreign currency loans by an Indian corporate body. Permanent instruments, such as bonds offering pre-specified coupons, are typically sold overseas to raise large amounts of cash.

Proposed loan structures include mezzanine financing, equity-backed bridge loans to be repaid in cash and an 18-month senior credit facility. The last of these structured instruments could be refinanced later either by a long-term bond or by a loan.

The proceeds from the latest fundraising will be used to partly finance the acquisition of Holcim’s stakes in the two Mumbai-listed cement companies – Ambuja Cements and ACC. Barclays, Deutsche Bank and Standard Chartered Bank previously underwrote all of the funding lines.

These lines of credit are now split, with several other foreign banks participating in the transactions.

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The Adani Group did not respond to ET’s questions. Individual banks could not immediately be reached for comment.

The senior debt facility will likely raise up to $3 billion, while the mezzanine line could raise $1 billion. The bridge loan, with a term of one to three years, is set at $500 million and would be repaid in cash.

The bridging loans would be secured by shares of the two cement plants acquired.

The mezzanine loan is offered at a price between 7 and 8%. Loans are expected to be priced after adding 450 basis points to the Secured Overnight Funding Rate (SOFR), a global rate indicator that replaced the London Interbank Offer Rate (LIBOR).

One basis point equals 0.01%.

Major Global Banks

Some of the banks involved in the talks include

Citi, JP Morgan, MUFG, Mizuho Bank, SMBC and a few Middle East based lenders.

Mezzanine financing is a hybrid of debt and equity financing that gives the lender the right to convert debt into equity in the event of default.

The group is currently exploring each bank’s ability to lend. Each bank can lend between 200 and 500 million dollars.

“Adani Group is looking to expand syndication initially limited to just three banks,” said an executive involved in the process.

Previously, three banks had underwritten the entire sum, offering about $1.8 billion each.

“The borrower now checks with each bank offering several options to raise funds in dollars,” another executive said.

The Adani Group is acquiring the two companies for $10.5 billion. The Adani Group plans to contribute $3 billion as developer equity.

The Swiss company Holcim has signed a binding agreement with the Adani Group for the takeover.

Holcim, through its subsidiaries, owns 63.19% of

and 54.33% in .

Open offers for Ambuja Cements and ACC shareholders will begin on July 6 and close on July 19, according to a tentative schedule from the Adani family.

An open offer is triggered if an acquirer owns 25% or more of a target company.

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