Adani Electricity to Raise Up to $1.5 Billion Overseas

Adani Electricity Mumbai Ltd has announced that it is set to raise up to $1.5 billion in what could be one of the leading overseas borrowing exercises by an Indian company in the 2020.

The company, a subsidiary of Adani Transmission Ltd, is estimated to raise about $1 billion via bonds and $400-500 million through syndicated loans, three people with direct knowledge of the matter stated.

The profits will be used to expand capacity and refinance loans taken to fund the procurement of Anil Ambani’s Mumbai power distribution company two years ago. Adani aims to diminish costs by tapping comparatively cheap money available overseas. Presently, debt securities worth $11 trillion yield negative returns globally.

The planned bonds will be offered globally, comprising in the US. The securities may be of 7-10-year maturity. The company is said to have sought ratings for the proposed issue, which could be investment grade, on par with India’s sovereign rating. The proceeds from the bonds will be used to refinance loans taken to fund the acquisitions two years ago.

“The company had taken loans from large local banks including ICICI Bank, SBI and Bank of Baroda with five- to sevenyear maturities, which it will pre-pay using the bond proceeds,” said one person.

The company is also in talks with foreign banks to raise up to $500 million through syndicated offshore loans, which will be used to expand capacity next year.

The syndicated loans would be three- or five-year money and be priced after adding 250-275 basis points over and above the London Inter-Bank Offered Rate.