Adani Group May Trim Capex Plans In Some Businesses After FPO Fiasco: Report

Adani Group will use alternative funding channels from internal accruals, promoter equity funding and private placements to fund projects

Adani Group plans to slash its capital spending plans, days after the conglomerate's flagship firm called off a $2.5 billion share sale, citing sources Mint reported on Monday. According to the report, while providing more collateral in the form of stock pledges to lenders, the group may moderate its capex plans in some of its businesses.

Mint said that said the company might look at 16-18 months for growth in certain businesses, instead of a 12-month target, adding that Adani would return to its usual pace of growth once normalcy returns.

Adani Group will use alternative funding channels from internal accruals, promoter equity funding and private placements to fund projects.

Additionally, Adani Group's domestic lenders do not plan to cut off the conglomerate from utilising sanctioned but unused credit lines for fears it could backfire and lead to defaults, Mint said in a separate report, citing bankers.

Shares of Adani Group companies have lost more than half their market value, in excess of $100 billion combined, since US short-seller Hindenburg Research raised questions in January about the group's debt levels and use of tax havens. Soon after, group firm Adani Enterprises called off the share sale.

Following the withdrawal of the Follow-On Public Offering (FPO) by Adani Enterprises, the company has also shelved a plan to raise around Rs 10 billion ($122 million) via a public bond sale, as reported by news agency Bloomberg.

The report cited people familiar with the matter saying that the Adani group had planned the public note issuance for January but the plan is being shelved following the share price crash in recent days. Adani stock crisis started after US-based short-seller Hindenburg Research last month accused it of stock manipulation and accounting fraud. The group has vigorously denied the allegations.

According to the report, Adani Enterprises was working with Edelweiss Financial Services Ltd., AK Capital, JM Financial, and Trust Capital, for the bond issuance but the activity has now stopped.

The report mentioned that according to Moody's Investors Service, the market collapse will probably make it harder for Adani Group to raise money for capital projects or to refinance debt over the next year or two.