India's Adani group units in talks to tap local bond market -sources

MUMBAI, Aug 11 (Reuters) - Two units of Indias Adani group are in talks with merchant bankers to raise as much as 15 billion rupees ($181 million) each through local currency bonds as part of the ports-to-power conglomerates aim to raise 100 billion rupees this financial year, a company official and three bankers said.

The plans are part of the Adani groups tentative return to the local bond markets after a hiatus since January when U.S. short-seller Hindenberg Research raised governance concerns that led to a selloff in the group companies stocks. The group has denied these allegations.

Adani Airport Holdings and Adani Ports and Special Economic Zone (APSE.NS) may tap the market first, with offerings of around 10-15 billion rupees, the bankers said.

They are looking to issue up-to-five-year bonds as soon as September, said one banker directly familiar with the plans.

The sources spoke on condition of anonymity as they are not authorised to speak to the media. The Adani group did not respond to Reuters requests for comment.

“The (Adani) group is testing investors appetite for its securities and will tap the market only when there will be a comfort of demand,” said the second banker who advises the conglomerate on local borrowings.

The groups flagship Adani Enterprises (ADEL.NS) as well as Adani Electricity Mumbai are also in talks for possible debt issues, the bankers said.

However, plans will be finalised only after the markets regulator submits its report on its investigation into Hindenburgs allegations, likely by Monday, the second banker said.

“Post that, all these fundraising plans may start getting finalised as initial talks have already started.”

Initially, group companies may have to offer a higher spread than their last issuance, said a third banker aware of the discussions but not directly part of the deal.

“Domestic institutional investors may not immediately start investing in these bonds and demand will be seen from corporates, high net-worth individuals and some banks,” the banker said.

Adani Enterprises returned to the market in July to raise 12.5 billion rupees through three-year bonds, but its interest costs rose to 10%.

Adani Ports last tapped the market in October 2021, when it raised 10 billion rupees via 3-year bonds at a coupon of 6.25%.

($1 = 82.7475 Indian rupees)