Japanese banks lead $750 million financing for Adani Energy amid India push

By Saikat Das

 

Adani Energy Solutions Ltd., controlled by Indian billionaire Gautam Adani, secured a $750 million loan led by two Japanese banks, according to people familiar with the matter, in the latest sign of Japanese lenders’ surging interest in India. 

The dollar-denominated facility has a five-year tenor and priced about 200 basis points over the benchmark Secured Overnight Financing Rate, said the people, who asked not to be identified because details are not public. Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Banking Corp. led the financing, according to a press release Monday.

 

The financing highlights Japanese firms’ bid to capture a slice of the world’s fastest-growing economy, particularly in financial services, as they seek growth and yield beyond their home market. Last year, Sumitomo Mitsui Financial Group Inc. became Yes Bank Ltd.’s biggest shareholder, while Mizuho Financial Group Inc. made its largest investment in the country with the purchase of a controlling stake in investment bank Avendus Capital Pvt.

 

Japanese banking behemoths have also been large lenders to Adani Group companies, and even maintained ties when other lenders reassessed exposure after the US indictment. The conglomerate plans to raise as much as $1.5 billion worth of yen-denominated debt in the next year and a half in a bid to diversify its financing amid concern of a sustained decline in the dollar. 

 

Adani Group didn’t immediately reply to Bloomberg’s email seeking comments. 

 

Proceeds from the loan will fund Adani Energy’s high voltage direct current transmission project, carrying solar power generated in Rajasthan’s desert to Fatehpur, a city in the state of Uttar Pradesh, the press release said. The investment comes as India looks to accelerate clean energy growth and meet one of Prime Minister Narendra Modi’s five climate goals announced at the 2021 Glasgow summit. 

 

The borrowing could be refinanced at a later stage either through a different currency or another type of debt, such as a US private placement, said the people. Last month, Japan Credit Rating Agency rated Adani Energy Solutions BBB+, with a stable outlook.