Indian lenders look to refinance Adani's stake acquisition in Ambuja, ACC

While there are curbs on banks for directly funding takeovers and acquisitions, banks will assess any room for funding via overseas branches and subsidiaries when exposure review is done

Indian lenders are looking to provide re-financing support to Adani group a few months down the line for the short term credit taken to acquire Swiss cement major Holcim's stake in Ambuja Cements and its subsidiary ACC.

While there are curbs on banks in India for directly funding takeovers and acquisitions, banks will assess any room for funding via overseas operations (branches and subsidiaries) when exposure review is done. Such review of group exposures will happen as a prudent risk management step to understand implications of such a deal, bankers said.

Foreign banks Standard Chartered Bank, Barclays and Deutsche are involved in financing the acquisition. The spokesperson for Standard Chartered Bank declined to comment. Barclays, another foreign lender, did not respond to messages.

On Sunday the Adani family, through an offshore special-purpose vehicle, announced that it had entered into definitive agreements for the acquisition of Holcim's stake in Ambuja Cements and its subsidiary ACC. The deal value is pegged at $10.5 billion (around Rs 81,361 crore), including the open offers.

The size of the open offer for Ambuja Cements Ltd's 516.35 million shares is pegged at Rs 19,879.57 crore. The size of the offer for ACC Ltd's 48.95 million shares is pegged at Rs 11,259.97 crore.

Senior public sector bank executive said usually, there is bridge funding arranged (for upto six months) from private equity and institutional investors to make acquisitions. After the takeover and related process including documentation is done in six months, the acquirer looks for bond or loan syndication. This is long term money (3-5 years) used to retire short term funds taken for acquisition.

The group may approach banks, including Indian lenders, for borrowing through foreign branches. After acquisition, a lot of information and assessment is at hand for lenders to get comfort and take a long-term view, said a head of corporate lending with a private bank.