Adani Group’s Bold Move: Tapping Public Bonds in India to Diversify ₹57,000 Cr Borrowings

Ahmedabad: Adani Enterprises is set to launch a public issue of non-convertible debentures (NCDs), marking the Adani Group’s first venture into public bonds. This ₹800 crore issue is just a small part of the group’s total borrowings, which stand at nearly ₹57,000 crore. However, it signals a strategic move towards diversifying the group’s borrowing sources over the next decade.

Jugeshinder Singh, the Chief Financial Officer of Adani Group, stated that the primary goal of this issue is to establish a domestic debt capital market for corporates in India. He mentioned that while the group doesn’t currently need this funding, it is important to develop a solid capital funding profile for the future.

Investor Allocation

The NCD issue is structured to attract individual investors, with 60% of the issue reserved for them—split equally between retail investors and high net worth individuals (HNIs). Another 30% is allocated to non-institutional corporate investors, and the remaining 10% is reserved for institutional investors like mutual funds and insurance companies.

Singh explained that although the group hasn’t set specific targets for debt allocation across different sources, domestic debt capital markets could eventually make up 5-10% of the Adani Group’s borrowings. This figure could increase to 15%, depending on market conditions and the risk profiles of different businesses within the group.

Evolution of Debt Profile

Over the past eight years, the Adani Group’s debt profile has changed significantly. The share of borrowings from public sector banks, which used to make up more than half of the group’s debt, has now dropped to about an eighth as of March 2024. At the same time, exposure to international banks has increased to 28% from zero. The group has also significantly increased its reliance on bonds, with debt exposure from bond issuances more than doubling to 31% as of March 2024.

Strategic and National Motivation

The Adani Group is focused on the growth of energy and logistics in India—sectors that require stable, long-term debt capital. However, relying heavily on international lenders exposes the group to risks from global market fluctuations, as seen with the recent rise in interest rates led by the US Federal Reserve. Some Indian companies with large foreign debt struggled to refinance during this period as global investors preferred safer markets.

To mitigate these risks, Singh emphasized the need to tap into unmonetized domestic assets like gold and land. He also highlighted the geopolitical significance of using domestic capital, arguing that the financial benefits of India’s infrastructure growth should benefit Indians rather than foreign investors.

Singh concluded by saying that the Adani Group aims to help build India’s future at a rapid pace, much faster than other developed countries have done in the past. He expressed confidence that future generations will look back on this period as a time when India seized its opportunities rather than faltering.