Adani Group Eyes Doubling Debt Exposure in Domestic Capital Markets, Says CFO; Focus on Adani Green, Adani Energy Solutions, and Capital Expenditure

The Adani Group may boost its debt exposure in the Indian capital markets to 10% of its total loans, as long as the borrowed funds mature within five years, according to Chief Financial Officer Jugeshinder Singh. Currently, Indian capital markets account for 5% of the group’s total outstanding debt, which amounted to ₹12,404 crore as of March 2024.

Consideration of Longer-Term Debt

Singh mentioned that if longer-duration debt is taken into account, the group could increase its local market exposure to as much as 15%. He made this statement following the launch of Adani Enterprises’ first non-convertible debenture (NCD) issue worth ₹800 crore.

Details of the NCD Issue

The NCD issue, which is part of Adani Enterprises’ fundraising efforts, is set to open on September 4 and close on September 17. The debt instruments will have tenures of 24, 36, and 60 months, offering interest rates of 9.25%, 9.65%, and 9.90%, respectively.

Planned Capital Expenditure for the Year

Adani Enterprises has outlined a capital expenditure plan of ₹80,000 crore for the year, which will be allocated to various businesses, including airports and roads. Singh referred to this NCD issue as a “small start” to the series of debt issues the group intends to roll out over the next two decades. He stressed the importance of funding core infrastructure and energy development in India with domestic capital.

Current Debt Distribution

Domestic lenders, including banks and non-banking financial institutions, currently make up 36% of the Adani Group’s total debt, an increase of around 500 basis points during the 2023-24 fiscal year. By the end of March 2024, Indian lenders had provided ₹88,100 crore in loans to the group out of a total debt of ₹2,41,394 crore.

Strategic Use of Global and Domestic Debt

Singh explained that the group plans to use domestic debt for businesses like metals and Poly Vinyl Chloride (PVC) while relying on global markets for funding Adani Green and Adani Energy Solutions. He emphasized that the risk-adjusted cost of capital, rather than the interest rate alone, is crucial when choosing between global and domestic debt.

Importance of Investor Experience

As the Indian capital markets have a strong appetite for debt, Singh highlighted the importance of ensuring that debt instruments meet the needs and expectations of domestic investors. He pointed out that the group’s challenge lies in creating offerings that are appealing and beneficial to these investors.