Gautam Adani takes new tycoon risk to next level https://www.reuters.com/breakingviews/gautam-adani-takes-new-tycoon-risk-next-level-2022-08-09/ August 10, 2022
There is none of the obvious financial profligacy that broke many of his rivals in recent years, but other concerns cast a shadow over the billionaire who is starting to get too big to fail.
A bigger worry is a top-cited complaint among analysts and money managers: that the value of his tightly held companies has been puffed up through opaque Mauritius-based funds. After group stocks nosedived in 2021, a government minister in a written reply to parliament disclosed the securities regulator was investigating some Adani companies without providing more details. Such probes can go on for years and quietly fizzle out. For its part, Adani says that the regulator continues to approve all its proposals. Whatever the merits, such reputational concerns could hinder Adani’s ability to rally external support if leverage or access to capital ever become a problem.
While the amount borrowed across the listed companies has more than tripled to 2.3 trillion rupees ($30 billion) over the past decade, aggregate net debt has fallen to about 4 times EBITDA. He has diversified funding sources too, reducing his dependence on state banks, and extended the time available to pay off liabilities: 50% of debt is in capital-markets instruments and repayments stretch from 2026 through 2046. Most of the group businesses, barring property and lending, are captured through listed entities where credit rating agencies see few obvious signs of weakness: Adani is buying cash-generating assets and its bidding behaviour for contracts or acquisitions is not considered aggressive.....the Indian tycoon is going the extra mile to win over debt investors. Buyout firm Apollo Global Management (APO.N), for example, announced in May it was buying Adani’s entire $750 million placement for Mumbai International Airport. Strategic equity backers are coming on board too: France’s TotalEnergies (TTEF.PA) picked up 20% of Adani Green Energy (ADNA.NS) last year in a $2.5 billion deal, and Abu Dhabi International Holding Company in May pumped around $2 billion into three Adani companies including Adani Transmission (ADAI.NS).