Ports, pylons, cement: the best assets behind Adani’s debt pile

    Gautam Adani made himself one of India’s most powerful moguls by building a vast infrastructure empire — from the country’s busiest container port to power lines that criss-cross the subcontinent.

    The billionaire has long pitched his conglomerate as a way for investors to bet on “India’s growth story” as his logistics, electricity and even data centre businesses expand in tandem with the economy.

    As the Adani empire comes under siege following accusations of fraud from US short seller Hindenburg, its cash-generating infrastructure assets are providing comfort to some bondholders that group companies can service their debts. They will also be among those most coveted if the billionaire is forced to sell businesses.

    “Those assets are real. The ports are there, the airports, the power plants, the railway lines, the mines,” said Amit Tandon, founder and managing director of Mumbai-based proxy advisory Institutional Investor Advisory Services.

    One holder of bonds issued by Adani Ports and Special Economic Zone (Apsez) said the group’s logistics arm had lent “against marquee infrastructure assets that are critical to India’s growth”.

    India’s central bank insists it is sanguine about the impact of the Adani crisis on the country’s banks because they have mostly lent against the group’s assets rather than shares. “Our domestic banks’ exposure is against the underlying assets, the operating cash flows,” deputy governor Mahesh Kumar Jain told a press conference on Wednesday.

    But with the pressure continuing, money managers who have steered clear of Adani say there would be willing buyers for the infrastructure assets that have underpinned his leveraged empire.

    “Ports is the prized asset,” remarked one Mumbai-based fund manager. Another pointed to Adani Transmission and the group’s airports as assets it “could sell easily”.

    The Adani Group, which vehemently denies Hindenburg’s allegations, did not respond to a request for comment about whether it would consider divesting assets. Two bankers close to the conglomerate said they thought sales were extremely unlikely, and one person familiar with the matter argued that for the Adani Group to “get into distress, its assets have to get into distress”.

    But some analysts are less convinced. “If he had some common sense he’d sell some right away,” said a veteran international banker, who did not lend to Adani.


    Adani built his first port at Mundra into a logistics and transport hub that is now India’s biggest commercial port by volume. Apsez controls 24 per cent of India’s marine cargo market, making it the dominant player.

    Comprising 13 ports, as well as warehousing, grain silos and railways, Apsez said this week it was on track to generate earnings before interest, tax, depreciation and amortisation of Rs122bn-126bn (around $1.5bn) for the financial year ending in March. Its debt is still more than three times higher than earnings, the company says, but it plans to slow investments to lower that ratio.

    It has been expanding abroad, with ventures in Israel and Sri Lanka, while extricating itself from a controversial investment in Myanmar.

    Apsez’s cash and cash equivalents at the end of last year were Rs63bn, raising questions about whether Adani might lean on his most mature company to support other parts of his empire. A second Apsez bondholder said they believed “the biggest risk is that it’s used to bail out some of the other entities that could be in need of capital”.


    The Adani Group “will not like to sell until they are pushed to the wall”, said a Mumbai-based credit risk specialist. “But if you ask me, the assets that have equity value . . . it is the Transmissions business.”

    Started in 2006, Adani Transmission is a holding company for power assets across India, including a distribution business in the financial capital Mumbai that is 25 per cent owned by Qatar Investment Authority.

    Adani is still investing heavily in building electricity projects, and Fitch puts Transmission’s debt at around five times its earnings. But bankers argue that many of Adani’s power projects — including solar — operate under government contracts, regarded as reliable sources of cash.

    Transmission this week reported consolidated profit after tax of Rs4.8bn for the three months to December last year, a year-on-year rise of 73 per cent that was boosted by a one-off payment.


    Adani emerged the surprise victor of India’s airport privatisation push in 2018, winning the right to operate and develop all six facilities up for auction. The group also acquired India’s second busiest airport in Mumbai, and is building a brand new one in neighbouring Navi Mumbai.


    Adani became India’s second biggest cement maker virtually overnight when it last year acquired Holcim’s Indian assets, Ambuja Cement and its subsidiary ACC, in a $10.5bn deal.

    Ambuja is debt-free and has just over $1bn of cash and equivalents. One Mumbai financier pointed out that these cement businesses are “cash cows”, which Adani could potentially borrow against. The person familiar with the group’s thinking on such issues, said this idea was “rubbish”.

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