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Japan's leading banks remain closed to billionaire Gautam despite US bribery charges, even as other global companies such as Jefferies Financial Group and Barclays are reconsidering their exposure to the Indian conglomerate・The company plans to maintain its relationship with Mr. Adani.
Mizuho Financial Group expects the recent controversy surrounding Mr. Adani to have no long-term impact and intends to continue supporting the group, according to people familiar with the matter. According to people involved, Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group also have no plans to withdraw and are willing to raise new funds if necessary.
Spokespeople for all three Tokyo-based financial institutions declined to comment. Representatives for Adani Group did not immediately comment.
Japan's aid comes after Adani and others were indicted on charges of conspiring to pay $250 million in bribes to Indian government officials to win solar energy contracts. It highlights the cracks. Adani's large ports group denied the charges, calling them unfounded. Company representatives are meeting with lenders and investors to reassure them and explain the company's position on the issue.
Although new requests for financing from the group are unlikely at this point, some global banks are reducing their exposure to India's largest conglomerates, concerned about reputational risk. Capital-rich Japanese lenders feel secure in backing cash-producing assets. Adani has strong ties to the government and it will take a long time for the U.S. to pursue legal proceedings, the people said.
“Based on their experience in Southeast Asia in the 1990s, Japanese banks have developed a sophisticated framework for assessing risks in emerging markets,” said Ben Charoenwong, an associate professor at Inseed in Singapore. , spoke about lenders' risk tolerance after the financial crisis. Asian financial crisis. “Banks like MUFG and SMBC, which see India as a key growth market, have significantly reduced their overall India exposure, although they may tighten processes or raise risk premiums on certain trades. It's unlikely.”
Adani Green Energy shares rose as much as 15% on Friday on hopes of continued financial support from some banks, the highest level since February 7, while Adani Energy Solutions rose as much as 13%. It increased by more than %.
Meanwhile, Barclays, which has long been Adani's go-to company, has suspended new loans and loans to the group for the time being, according to people familiar with the matter.
Bloomberg News earlier reported that the British lender had been gradually reducing its exposure in direct lending and bond underwriting since short seller Hindenburg Research targeted the company last year. Still, the company last year provided part of a $394 million trade financing line to Adani operations for a solar module factory. Earlier this year, Barclays was one of the bookrunners for a $409 million bond sale by Adani Green Energy.
A Barclays spokeswoman declined to comment on its contacts with Adani or the status of its relationship with the group.
Jefferies, which has backed Adani since Hindenburg accused the conglomerate of fraud, remains reluctant to do any new business with the group even after further accusations surfaced following the U.S. indictment, the people said. We haven't discussed it. The bank has not made a formal decision on whether to suspend or cease trading and is awaiting a firm outcome from the charges before engaging in new transactions, the people said.
Jefferies briefly held some Adani shares on its balance sheet as a market maker, but not as an investment in the company, the people said. Adani Group accounts for less than 4% of Jefferies' India business, the company said.
Jefferies' India arm last year brokered the $1.9 billion sale of stakes in four Adani Group companies to Florida-based investment firm GQG Partners. Most recently, Mr. Jeffries was lead manager for flagship company Adani Enterprises, which raised $500 million in stock sales last month and other companies.
A representative for the New York-based company declined to comment.
Meanwhile, at least two other large U.S. banks that had sought to secure some bond funding from Adani Group in recent months have now put their efforts on hold, according to people familiar with the matter.
Some of this year's biggest foreign bond deals by Indian companies, including Adani Group, feature Japan's biggest financial institutions, which recently raised their annual profit forecasts to a new record, according to data compiled by Bloomberg. It was shown that Most recently, he was one of the organizers of a $600 million bond sale planned by Adani Green, which was called off after the charges came to light.
Mizuho is not too concerned about the current investigation and has no intention of walking away from the group, which has not refused to pay, people familiar with the matter said. Mizuho has helped finance Adani's unit, which operates ports and airports, a steady source of cash generation.
According to people familiar with the matter, Sumitomo Corporation and Mitsubishi UFJ are confident in the companies' ability to repay their loans and do not expect there to be a major impact on their businesses.
Some Middle Eastern banks, such as Emirates NBD Bank PJSC, say they are similarly unperturbed about their relationship with Adani, as are their Japanese peers. Officials said they had no intention of withdrawing existing commitments and would lend new funds to future projects on the back of a regular diligence process, adding that the capital had been earmarked for high-quality assets in Adani's portfolio. added. Emirates NBD declined to comment.
“With access to relatively low-cost capital, banks in Japan and the Middle East are actively seeking opportunities for global growth and diversification,” said Head of Institutional Research at Ashika Stock Broking Limited. Ashutosh Mishra said. Asset-heavy Indian conglomerates like Adani have strong growth prospects. ”
stock price crash
Adani's dollar-denominated bonds and stocks plummeted immediately after the indictment, showing investors fearful of increased risk. Over the past week, S&P Global Ratings, Moody's Ratings and Fitch Ratings have downgraded the credit outlook for some of Adani's companies from stable to negative. S&P cited concerns about access to financing and cost of financing. Fitch also said it may downgrade Adani Ports and Special Economic Zone Ltd.'s dollar-denominated bonds to junk.
Companies in other sectors are also reviewing their relationships with Adani. TotalEnergies SE said it would not make any new investments in the group until the impact of the US indictment is clear. Meanwhile, Kenya canceled two Adani contracts worth about $2.6 billion following the accusations.
Adani Enterprises' stock price fell 23% on November 21 in response to the US move, but has since recovered some of its losses. Shares rose this week after the company announced that Gautam Adani and his aides have not been charged under the U.S. Foreign Corrupt Practices Act.
–With contributions from Catherine Bosley, Chanyaporn Chanjaroen, Baiju Kalesh, Harry Wilson, Jan-Henrik Förster, and Taiga Uranaka.
(Adds Adani shared response in 7th paragraph.)
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