The Adani Group has secured a $3 billion loan from an undisclosed sovereign wealth fund, news agency Reuters reported quoting two anonymous sources familiar with the matter. The loan has the potential to increase to $5 billion, the sources told Reuters, and the memo which revealed the news was circulated to investors during a three-day roadshow that concluded on Wednesday.
Adani's management reportedly told investors that the sovereign wealth fund was from the Middle East, although this information was not included in the memo. The Reuters' sources requested anonymity as they were not authorised to speak with the media.
This announcement comes after Adani's management told bondholders on Tuesday that it expected to repay or prepay share-backed loans worth between $690 million and $790 million by the end of March. The group is currently holding a fixed-income roadshow in Singapore and Hong Kong to boost investor confidence in light of recent share price declines and a regulatory probe.
Seven Adani Group companies have collectively lost over $140 billion in market value since January 24th, when Hindenburg Research issued a report alleging stock manipulation and improper use of tax havens, as well as concerns over debt levels. Adani has denied any wrongdoing and rejected these allegations.
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During the final day of the roadshow in Hong Kong, Adani's management reportedly informed investors that some of the $3 billion credit had already been used to repay share-backed loans. The sources also told Reuters that the company's management sought to reassure investors that it had sufficient cash to prepay many debts, including onshore bonds, and had already started doing so. However, for offshore bonds, such as some three-year U.S. bonds, the group is not permitted by regulators to prepay and also has no plans to buy them back as it needs to maintain a certain cash level to retain its credit ratings.
While the identity of the sovereign wealth fund remains unknown, this loan will undoubtedly help to alleviate some of the debt concerns surrounding the Adani Group. The group's management has been taking steps to assure investors that it has sufficient cash flow to repay debts and that it is taking action to address its debt levels. In addition, the loan from the sovereign wealth fund will help to improve the group's liquidity and give it more financial flexibility.
