Global lenders may freeze fresh credit to Adani firms, await govt reaction

Some global banks are considering temporarily halting fresh credit to the Adani group but staying put with existing loans following US prosecutors’ charges of its billionaire founder Gautam Adani for fraud, sources said.

 

US prosecutors have charged eight people, including Gautam Adani, with agreeing to pay about $265 million in bribes to Indian government officials to obtain contracts and develop India's largest solar power plant project.

 

Senior executives at two of Adani’s global lenders said that they have had multiple calls within their respective banks since the indictment details were announced to discuss exposure to the group and what the impact of the latest development would be on the group’s financials.

 

 

“We will have to put a pause to fresh lending until we are able to figure how this will play out. I think it will be a while before the bank is able to tap the credit market,” said a banker at one of the leading Western banks.

 

The banker said most of the group firms have stable cash flows and are not in “desperate need” to raise capital.

 

The indictment would, however, cast a cloud over fundraising plans for expansion within India and abroad, as there will be greater creditor scrutiny not just on the indictment outcome but also on the “key man risk” for the group, the banker said.

 

A senior banker at another Western bank, which is one of the major lenders to the group, said that the bank would also put a temporary freeze on fresh lending and was keeping a close watch on the Indian government’s reaction to the indictment.