Adani raises $5.25 bn from global banks to fund acquisition of Ambuja, ACC

The Adani family is acquiring Ambuja and ACC with a capacity of 70 mtpa at a total cost of $10.5 billion, including the open offers to be made to the minority shareholders of the companies

Shepherded by BNP Paribas, Barclays, and Citigroup, top international banks have endorsed Adani Group’s plans of acquiring Swiss firm Holcim’s stake in Ambuja Cements and ACC. The group raised $5.25 billion as debt financing, acknowledging support to the acquisition from international bankers.

A banking source said DBS Bank, Emirates NBD, First Abu Dhabi Bank, ING Bank, Intesa Sanpaolo of Italy, Mizuho Bank, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Bank of Japan, and Qatar National Bank have also lent funds to Adani Group for the acquisition.

The Adani family is acquiring Ambuja and ACC with a capacity of 70 million tonnes per annum (mtpa) at a total cost of $10.5 billion, including the open offers to be made to the minority shareholders of companies.

Adani Group will first acquire Holcim’s 63.1 per cent stake in Ambuja and 4.4 per cent stake in ACC for $6.5 billion. Ambuja, in turn, holds a 50 per cent stake in ACC. Adani Group will then make the mandatory open offers to minority shareholders at an offer price of Rs 385 per share for Ambuja and Rs 2,300 per share for ACC.

Bankers said strong support to the debt financing facility, notwithstanding international upheavals, shows the growing clout of the group among the international banking community.

“Some of the short debt raised will be refinanced by the group later. But raising such a huge amount within a few months of the announcement shows how foreign banks are supporting the Indian growth story,” said a banker privy to the transaction.

The debt facilities are divided into four parts: A short term debt of $500 million, an 18 month debt of $3 billion, a $1-billion facility with tenure of two years and $750-million facility with tenure of two years.

An international finance expert said the average coupon for such facilities would be 7.5 per cent (approximate). This is low, compared to the interest rates prevailing in India.

After the acquisition of Ambuja Cements and ACC, Adani Group will turn its focus to raising the combined capacity to 100 mtpa, from the present-day 70 mtpa, thus taking on industry leader UltraTech, which has a current capacity of 120 mtpa.

Ambuja and ACC will invest in new capacities with their own cash and also take fresh debt. Moreover, the expansion plans of both companies will be put on fast track with the goal to raise the capacity to 140 mtpa as demand from real estate and the infrastructure sector swells, say bankers.

If plans of Ambuja and ACC are any indication, the combined capacity will rise to 73 mtpa by next year — which is 12 per cent of market capacity. With various cost-cutting measures in place, including synergy benefits after the merger, Adani’s cement capacity could reach 100 mtpa through brownfield capacity at an attractive $80-90 per tonne, observe analysts.

Top Lenders

• Citibank  
• BNP Paribas  
• Barclays  
• DBS Bank  
• Emirates NBD Bank  
• First Abu Dhabi Bank 
• ING Bank
• Intesa Sanpaolo of Italy  
• Mizuho Bank  
• Mitsubishi UFJ Financial Group  
• Sumitomo Mitsui Bank of Japan 
• Qatar National Bank