With the support of failing banks, both foreign and domestic, the Adani group said it is engaging with hedge fund investors and global stress funds for capital injection. High-level sources say that for the initial round of funding, the group approached some of the big US-based hedge funds, including Farallon Capital, Davidson Kempner Capital Management and Baupost Group.
This is to meet your immediate capital requirement. It follows that negotiations are near the final stages with Farallon Capital for almost $500 million and this would likely mark the first tranche of capital (a mix of equity and debt) to flow into the Adani group since its failed follow-up public issuance. (FPO). “In about a week to 10 days, this investment is expected to materialize,” a senior source said. An email sent to the Adani group and Farallon Capital remained unanswered as of press time.
conditional capital
One of the key conditions set by potential investors is that the shares are free of encumbrances. To meet this stipulation, the group recently announced that it has repaid nearly ₹9.25 billion or $1.1 billion of loans that its promoters had secured by pledging shares in its group companies, namely Adani Ports, Adani Green Energy and Adani Transmission. These loans were to be repaid in September. However, almost a quarter of the developers’ equity stake in Adani Power remains encumbered, while the 2.66 per cent of the developers’ stake in Adani Enterprises is subject to liens. “Potential investors may insist that the shares of all group companies must be unencumbered,” said a person familiar with the matter.
Meanwhile, senior sources say the developers and their associated entities may have turned to short-term financing to finance the prepayment. Oaktree Capital Management and Davidson Kempner Capital Management, both specializing in special situation funds or stress funds and said to have tapped into Adani group bonds this week, may have bailed out developers by extending short-term credit options for prepay your debt obligations.
“These are investors who take high risk and often bet on the individual rather than the business,” one person was quoted above as saying. However, as the debt may have risen at the developer level, it is unlikely to affect the leverage of the listed group companies.
