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Top international banks led by BNP Paribas, Barclays and Citigroup have strongly backed the Adani group’s plans to acquire Swiss firm Holcim’s stake in Ambuja Cements and ACC. The group raised $5.25 billion as debt financing, thus showing support for the acquisition from the international bankers.
A banking source said 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 and Qatar National Bank have also lent funds to the Adani group for the acquisition.
The Adani family is acquiring Ambuja and ACC with a capacity of 70 mtpa (million tonnes per annum capacity) at a total cost of $10.5 billion, including the open offers to be made to the minority shareholders of the companies. The 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. The Adani group will then make the mandatory open offers to the minority shareholders at an offer price of Rs 385 a share for Ambuja and Rs 2,300 a share for ACC.
Bankers said the strong support to the debt financing facility despite 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 announcement shows how the foreign banks are supporting the Indian growth story,” said a banker close to the transaction.
After the acquisition of Ambuja Cements and ACC, Adani group is focusing on raising the combined capacity to 100 million tonnes per annum (mtpa), from the present 70 mtpa, thus taking on the industry’s leader, UltraTech which has a capacity of 120 mtpa. Ambuja and ACC will invest in new capacities with their own cash and also take fresh debt. Besides, the expansion plans of both companies will be put on fast track with a goal to raise the capacity to 140 mtpa as demand from real estate, and the infrastructure sector is rising fast, say bankers.
According to the plans of Ambuja and ACC, the combined capacity would rise to 73 mtpa by next year, which is 12 percent of market capacity. With various cost-cutting exercises 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, said analysts.
The debt facilities are divided into four parts: A short term debt of $500 million, a 18 month debt of $3 billion, a $1 billion facility with a tenure of two years and $750 million facility with a tenure of two years.
An international finance expert said the average coupon for such facilities would be 7.5 per cent (approx) which is low when compared to the interest rates prevailing in India.
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