Adani Group says it raised $16bn through ‘global equity’ after CreditSights called it ‘deeply over-leveraged’

Adani Group says it raised $16bn through ‘global equity’ after CreditSights called it ‘deeply over-leveraged’

New Delhi: Days after Fitch Group’s debt research unit CreditSights called it “deeply over-leveraged”, industrialist Adani Group, headed by Gautam Adani, reportedly contacted the firm. The group, in a comprehensive 15-page note, highlighted its systemic capital management plan, improving the net debt to operating profit ratio among others.
“We have reviewed the CreditSights report and provided our key observations and clarifications on the issues highlighted therein,” Adani Group said in the memo responding to CreditSights’ concerns. The content of the note entitled “Adani Portfolio-Response to Recent News Reports” has been reviewed by Economic Times

Two weeks after CreditSights said the Adani Group was “deeply overleveraged” and that its investments in capital-intensive businesses could pose long-term risks for investors, the Gautam Adani-led conglomerate said it had raised $16 billion through “global equity” in the past. three years. The money was raised as part of a systemic capital management plan for half a dozen companies in the group.

They were raised through a combination of primary, secondary and committed equity from global investors including TotalEnergies, Abu Dhabi-based International Holding Company PJSC, QIA and Warburg Pincus, he added.

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“It also resulted in the deleveraging of debt at the developer level, allowing the reduction of the pledge of the developer’s stake in listed companies,” the Adani Group said in the note.

In addition, the capital management plan of the companies in the group led by Adani is set to automatically fund growth and maintain measurable deleveraging. This deleveraging has been demonstrated over the past nine years, added the notary.

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Decline in EBITDA, PSB loans

In addition, Adani Group pointed out that its net debt to earnings before interest, tax, depreciation and amortization (Ebitda) ratio has been reduced to nearly 3.2x from 7.6x nine years ago. Its net debt was Rs 1.6 lakh crore at the end of the June quarter of this financial year, against Rs 50,200 crore of current Ebitda.

Capital markets’ share of fundraising has jumped over the past six years, with half of the group’s debt coming from global and local bond sales, the Adani Group’s note said, adding that debt issuance bonds represented 14% of gross debt at the end of the 2016 financial year.

In addition, its loans to public sector banks have more than halved to around one-fifth at the end of FY22. value chain, and account for approximately 85% of all growth investments,” the conglomerate added.

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CreditViews of Adani Group

The conglomerate’s debt-funded growth plans could spiral “into a huge debt trap” and result in distress or default for its businesses and the wider Indian economy in a “worst-case scenario”, it said. said CreditSights on August 23.

CreditSights also flagged “high key man risk”, saying senior management capacity in Gautam Adani’s absence may be insufficient.

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