| Date: |
10-06-2015 |
| Subject: |
Adani Group to hit global bond market with $1.5-billion issue |
MUMBAI: The $10-billion Adani group is tapping the global debt market with its maiden dollar bond issuance for the flagship Adani Ports and SEZ (APSEZ). The company is looking to raise $1-1.5 billion from investors, said multiple sources aware of the matter. The preliminary road shows for this fund-raising initiative are getting launched this week and may even start as early as Wednesday.
Investment banks Standard Chartered, Bank of America Merrill Lynch, Citi, Barclays and SBI Capital have been mandated to manage the issue. Some more may join in. The company is seeking investment grade ratings from international rating agencies.
The quantum and tenure of the bonds will be finalised once the ratings come in, but sources said it will be a 5-10 year paper. The principal rationale for the issue is to swap the company's high cost rupee borrowings with cheaper dollar funding and for capex. The company's FY15 net debt (unaudited) stood at Rs 15,155 crore, up 30.45% from FY13. This issue may be followed by another in the coming months as Gautam Adani himself has gone on record to say two of his group companies—APSEZ and the newly created Adani Transmission — are looking to mop up Rs 25,000 crore from global markets. With APSEZ alone having plans to raise up to Rs 15,000 crore (around $2.5 billion), most expect a followon offer soon.
An Adani Group spokesperson declined to comment. "Long-term investors like pension funds and insurers, who believe in long-term India growth story may invest in these dollar-denominated offshore bonds of domestic infrastructure companies," said Sidharth Rath, President of Treasury & Business Banking at Axis Bank. "The cost of borrowing will depend on how the issuers mange their forex risk."
"Even though US bond yields are rising, Indian issuers with investment grade still obtain better rates. The recent Bharti Airtel issue proved this. All agree that the infrastructure sector will gradually pick up," added another investment banker with a large European bank, who did not wish to be identified. APSEZ, whose market value has gone up by 20.45% in the last one year, is currently the largest multi-port operator of India.
The company has been expanding its footprint through greenfield projects and acquisitions, following what is known as the 'string of pearls' strategy. Company watchers say, post Dhamra, expanding in the east coast has been its key focus. Other than the existing eight ports or terminals currently in operations, it has also emerged as the sole bidder for a greenfield port in Kerala. It will also commission the fourth container terminal of Chennai soon. The multi-cargo ports of Dhamra and Mundra are the second hubs for Adani.
"They are clearly looking to capture the coal traffic from Indonesia and Australia where they have mining operations. At the same time, they are also eying freight traffic from Bangladesh and Myanmar to emerge as a powerhouse in the Bay of Bengal.
After Singapore, they want to be the next biggest hub in the South Asia," said a long-time Adani watcher. Experts expect one more acquisition from the Adanis on the eastern coast in the coming months.
Source : economictimes.indiatimes.com
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