In a significant vote of confidence for India’s corporate debt market, the country’s largest mutual fund is set to play a key role in the Adani Group’s biggest-ever rupee bond issuance.
SBI Mutual Fund is expected to take at least 10% of a planned ₹75 billion bond issue by Adani Power, according to 3 merchant bankers familiar with the matter. The rupee-denominated issue, valued at nearly $820 million, is likely to be launched later this week.
SBI Mutual Fund, which is India’s largest asset manager by assets under management, will act as one of the anchor investors for the offering. The fund has committed ₹7.50 billion to the issue, the bankers said, speaking on condition of anonymity as they are not authorised to comment publicly.
The proposed ₹75 billion fundraising will be the Adani Group’s largest rupee bond sale to date. Neither SBI Mutual Fund nor Adani Power responded to emailed requests for comment.
Adani Power plans to raise ₹28.60 billion through 2-year bonds and ₹26.90 billion via 3-year notes. SBI Mutual Fund is expected to buy ₹4.50 billion of the 2-year paper and ₹3 billion of the 3-year paper as part of its anchor investment.
The remaining funds will be mobilised through longer-tenure instruments. Around ₹6.75 billion will be raised through 4-year bonds, while ₹12.75 billion will come from 5-year bonds, according to the bankers.
The coupon rates have been set at 8.00% for the 2-year bonds and 8.20% for the 3-year bonds. The 4-year and 5-year papers will offer coupons of 8.30% and 8.40%, respectively. The bonds carry an ‘AA’ rating from Crisil and India Ratings, with a clause that steps up coupons by 25 basis points for every rating downgrade.
The issue is being arranged by Trust Investment Advisors, ICICI Bank, and Axis Bank. ICICI Bank and Axis Bank are also expected to back the issue with commitments of ₹3.31 billion and ₹3 billion, respectively. The banks did not respond to requests for comment.
Earlier in the current financial year, another Adani Group company, Adani Ports and Special Economic Zone, raised ₹50 billion by placing 15-year bonds directly with the Life Insurance Corporation of India.
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