Hindenburg-hit Adani Group claims stable ties with global banks in bid to ease investor concerns: Document

Adani Group told investors that several top Japanese and European banks have reaffirmed confidence in the embattled conglomerate after it was pummeled by a US short seller's critical report, a company document showed, said a report on Wednesday.

Led by billionaire Gautam Adani, the group's seven listed stocks have lost about $120 billion in market value since a January 24 report by US short seller Hindenburg Research accused it of improper use of offshore tax havens and stock manipulation, allegations the group has denied.

"Global banks such as MUFG, SMBC, Mizuho, Standard Chartered, Barclays, DBank (Deutsche Bank), consortium lender banks have reaffirmed confidence in Adani group," said the document which stated its goal was to assuage investors, reported Reuters.

Shares of listed Adani firms have regained some lost ground over the past month or so after it repaid some debt and attracted Rs 15,446-crore investment from boutique investment firm GQG Partners.

However, the ports-to-power conglomerate is battling an investigation by market regulator Sebi, which is looking into Hindenburg's allegations as well as the group’s related party dealings following a Supreme Court directive.

In a series of roadshows from Hong Kong to New York held in recent weeks for fixed income investors, the conglomerate has committed to achieving 20% year-on-year growth in core earnings and to diversify its debt portfolio, the document showed.

The document, which was reviewed by Reuters, did not elaborate on how the global lenders reaffirmed their commitment to Adani Group.

Several of the global banks already have business relationships with the group, ties which the conglomerate has previously pointed to as a sign of its strength to counter Hindenburg's allegations.

Debt concerns

The Hindenburg report had sparked concern among investors about banks' exposures to the Adani Group. Brokerage CLSA estimated in a Jan. 26 report that the consolidated debt of the top five Adani group companies, with some element of double counting, stood at $25.56 billion, with Indian banks forming 38% of that.

"The group has consistently diversified its long term debt portfolio and has reduced its exposure to banks by using other sources of capital," the document said.

Now, 39% of Adani's debt is currently in the form of bonds, 29% is from global banks and 32% comes from public or private banks in India, the Adani document added.

Adani Group's flagship arm, Adani Enterprises Ltd, was forced to shelve a Rs 20,000-crore FPO due to the stock market rout that followed the Hindenburg report in which the short-seller also raised many questions on Adani's debt levels.

The State Bank of India (SBI) and other public sector lenders "have raised no red flags" and were comfortable with its financial position, and lenders "have reaffirmed they will continue to lend to Adani", the document added.
 

With inputs from Reuters

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