Adani to Prepay $1.1 Billion Equity-Backed Loan to Contain Crisis

Indian tycoon Gautam Adani and his family have provided funds to secure a $1.1 billion loan

Adani, one of India’s most powerful moguls, whose businesses range from ports to energy to airports, has faltered since US short seller Hindenburg accused the group of stock price manipulation and accounting fraud. Adani has denied the allegations.

In a statement on Monday, the Adani Group said its founder and his family – majority shareholders of the Adani companies and known in India as promoters – had provided the funds to repay a $1.1 billion loan that was granted was only due in September 2024.

The loan came from a range of banks including Citibank, JPMorgan, Deutsche Bank, Barclays and Japan’s SMBC group, an Adani Group representative told the Financial Times. All banks declined to comment.

Pressure on the 10 listed Adani companies was compounded by the knowledge that shares in the companies were being pledged as collateral for loans. Data from the Bombay Stock Exchange shows that the SB Adani Family Trust has pledged shares as collateral for several of the listed companies.

The Adani Group had not responded to questions about which specific entity had received the loan as of the time of publication.

Adani said the early repayment of the loan would free up 168 million shares in Adani Ports, 27 million in Adani Green Energy and 12 million in Adani Transmission. The stock totals accounted for 12 percent, 3 percent and 1.4 percent of Adani’s stake in the listed companies, respectively.

Samir Arora, founder of the investment firm Helios Capital, said that by repaying the loan early, Adani was trying to demonstrate the financial strength of his empire.

“He shows you that I have $1.1 billion lying around that I can give you back,” Arora said. “It shows that they are not in such a desperate state.”

While Adani has extensively refuted Hindenburg’s claims, it has done little to stem the crisis engulfing the group. Since the allegations were made public on Jan. 24, the sell-off in Adani’s listed companies has lost 9.4 trillion rupees ($114 billion), or about 50 percent of their value.

In its statement on Monday, the Indian group said it is making the repayment early “in light of recent market volatility and in continuation of the promoters’ commitment to reduce the promoters’ overall debt supported by shares of listed Adani shares.” It said the promoters had given “undertakings” to “prepay all equity-backed financing.”

Shares of flagship Adani Enterprises, which was forced into a $2.4 billion follow-up sale last week, have fallen 54 percent since the report was published.

Adani has sought to reassure investors that it was not under pressure to cover losses on equity-backed loans granted to its companies, dismissing claims in Indian media as “market rumours”.

Adani, widely regarded as an ally of Prime Minister Narendra Modi, is coming under increasing political pressure. MPs from the Congress Party and other opposition groups protested at the Parliament compound in New Delhi on Monday, calling on Modi’s government to allow lawmakers to debate the Adani affair.

For the third straight working day, parliament – controlled by Modi’s Bharatiya Janata party – adjourned without a discussion taking place.

Opposition lawmakers chanted ‘down Adani government’ and ‘shame Adani government’ and ‘stop looting the poor’.

The intensity of the sell-off in Adani shares has prompted Indian authorities to try to reassure investors. The Securities and Exchange Board of India said over the weekend it was aware of “unusual price movements in the shares of a corporate conglomerate” and pledged to review and take “appropriate” action “if SEBI becomes aware of any information”. The regulator did not name Adani.

Additional reporting by Kana Inagaki in Tokyo Adani to Prepay $1.1 Billion Equity-Backed Loan to Contain Crisis

Adam Bradshaw

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