Why Adani needs another $1 billion

The group flagship plans to expand area under the Mumbai airport and triple its passenger-handling capacity with the fresh funds, the people said. "The bonds will be raised in dollars, mostly from investors in the US and Europe," said the first person, adding that 30-40% of the planned $750 million-1 billion amount will go into the solar panel business.

Adani Enterprises owns airports through its subsidiary Adani Airport Holdings Ltd and solar manufacturing via Adani Solar, an arm of another wholly-owned subsidiary Adani New Industries Ltd. The money will be raised for these twosubsidiaries.

"Adani is enhancing its focus on the green energy ecosystem. The supply of solar PV units has to be improved to match the country's renewable energy target. That creates an opportunity," one of the two people said, adding the amount will be raised in the next six months.

An Adani Group spokesperson declined to comment.

On Sunday, Adani said its data centre business joint venture, AdaniConneX, has secured commitment for a $1.44 billion loan. The JV plans to build nine data centres with a total capacity of 1 GW by 2030. "The financing has an initial commitment of $875 million, with an accordion feature to extend commitment up to $1.44 billion," the company said in a statement. Definitive agreements have been executed with eight international lenders -- ING Bank NV, Intesa Sanpaolo, KfW IPEX, MUFG Bank Ltd, Natixis, Standard Chartered Bank, Societe Generale, and Sumitomo Mitsui Banking Corporation.

Adani's debt burden

Around 34% of Adani group's total debt of about $27 billion or ₹2.26 trillion, which is around $9 billion, has been raised via bonds, mostly overseas ones.

Some of Adani's existing investors include BlackRock, AIA, Pimco, Fidelity, Apollo Global, Metlife, Cigna, Bluebay, Goldman Sachs and Barings. According to the person cited above, about 21 global investors purchased Adani's dollar bonds in the previous issuances, and many of them may join the coming issue as well.

Adani Enterprises had last raised about $750 million via bonds in April 2022 through a private placement, which will mature in 2029 and are not listed. That amount too was raised for the Mumbai International Airport Ltd (MIAL) project.

Adani group’s 15 listed dollar bonds erased their losses in January after a favourable Supreme Court ruling related to last year's Hindenburg Research report.

Airport plans

In March, Karan Adani, managing director of Adani Ports and Special Economic Zone (APSEZ) said the group will infuse about ₹60,000 crore in the next 5-10 years in airports, with almost 50% for expanding the air side that includes the terminal and runway capacity of the two airports in Mumbai over the next five years. A part of it will go into the city-side of the Mumbai airport over 10 years. Adani will expand the airports' runways, taxiways, hangars and passenger terminals, apart from surrounding infrastructure such as hotels and shopping malls, said the two persons.

Adani, which owns eight major airports in India, is planning to grow its passenger-handling capacity from 73 million to 250-300 million passengers by 2040, Adani Airport Holdings CEO Arun Bansal had said last month.

MIAL, which operates Mumbai's Chhatrapati Shivaji Maharaj International Airport (CSMIA), handles approximately 51 million passengers annually.

Karan Adani had said the group will also bid for the Airports Authority of India’s (AAI’s) 26% stake in the Mumbai airport, whose domestic terminal T1 will be rebuilt after Adani's Navi Mumbai Airport opens in March 2025.

Adani's solar agenda

Apart from airports, Adani plans to use a part of the upcoming bond proceeds to further speed up its solar panel manufacturing business, according to the two persons.

With 4 GW manufacturing capacity, Adani owns India's largest green-field single-location solar cells and modules production facility in Mundra Special Economic Zone, Gujarat.

"This fund (from upcoming bonds) will be used to build the world's first ever fully integrated ecosystem of 10 GW Solar PV manufacturing in Mundra," said the first person.

He added that Adani Solar could use the funds to raise production of key basic elements for manufacturing solar panels such as metallurgical grade silicon, ingots, wafers, cells and other ancillaries like glass, backsheet, aluminum frames, and junction boxes in the SEZ.

Earlier, in July 2023, Adani New Industries had raised $394 million from Barclays PLC and Deutsche Banks AG for solar manufacturing business through a trade finance facility as a part of the group's plan to increase solar panel manufacturing capacity to 10GW by 2027.

India's net-zero journey

Adani Group's solar equipment ambition is somewhat in line with India's quest to be net-zero by 2050 from being the world's third largest carbon dioxide emitter currently.

According to a recent Mercom India Research report, the manufacturing ecosystem has failed to keep up with India's solar energy generation capacity between 2014 and 2023. India added 7.5 GW of solar capacity in 2023, a drop of 44% compared to the previous year’s 13.4 GW, according to a February report by Mercom India.

Large-scale solar installations were down 51% year-on-year to 5.8 GW in 2023, affected by extensions granted to several large-scale projects and delays mainly due to land and transmission issues, Mercom added said, adding that India ended 2023 with cumulative installed solar capacity of 72 GW.

Adani Solar has sold over 7GW of modules to domestic and overseas customers since inception, and according to rating agency Icra, India's solar cell and module exports by domestic original equipment manufacturers (OEMs) reached ₹8,840 crore in fiscal year 2023, a 364% jump from ₹1,819 crore in FY22.