Adani Green Energy initiates negotiations with international financial institutions for a $1.8 billion loan

Adani Green Energy, the renowned renewable energy company owned by industrialist Gautam Adani, is reportedly in advanced discussions with a consortium of international lenders to secure a potential loan of up to $1.8 billion. It was reported that the funds from this loan will be designated for the further expansion of Adani Green Energy's already substantial solar and wind projects.

At this stage, specific details regarding the terms and conditions of the loan remain confidential. However, the banks engaged in these negotiations are said to include financial giants such as Barclays Plc, BNP Paribas SA, Deutsche Bank AG, First Abu Dhabi Bank PJSC, Rabobank, and Standard Chartered Plc, according to the same sources.

It is important to note that this transaction is still in progress, and the terms may undergo changes as discussions evolve. If the deal is finalized before late December 2023, it could be one of the top 20 major currency loans in Asia for the year.

This potential borrowing initiative follows closely on the heels of Adani Group's recent success in securing a $3.5 billion funding package. This significant financial package was utilized to refinance debt associated with the acquisition of Ambuja Cements Ltd. and ACC Ltd. The successful securing of these funds indicates a positive shift in investor confidence in the conglomerate. Adani Group faced a substantial short-seller attack earlier this year, which had previously led some banks to hesitate on debt refinancing.

Earlier this week, Adani Green Energy unveiled impressive financial results for the quarter and the first half of the fiscal year ending on September 30, 2023. The company, boasting an operational capacity of 8,316 MW (including 9,021 MW of AC capacity), continues to maintain its position as India's largest operational renewable energy portfolio.

One of the standout achievements in Adani Green Energy's performance is the substantial increase in energy sales, which soared by 78% year-on-year, reaching 11,760 million units in the first half of fiscal year 2024. This remarkable growth can be attributed to substantial capacity expansions and enhanced Capacity Utilization Factors (CUF) across its solar, wind, and hybrid portfolios.

The CUF for the solar portfolio witnessed a 90-basis point improvement year-on-year, reaching 25.2% in the first half of fiscal year 2024. This progress was driven by improved plant availability and increased solar irradiation. Similarly, the wind portfolio's CUF recorded a significant enhancement of 360 basis points year-on-year, reaching 40.2% during the same period. The consistent wind speeds and significant improvements in grid availability played a crucial role in facilitating this enhancement.

The company's outstanding revenue growth, EBITDA (earnings before interest, taxes, depreciation, and amortization), and cash profits can be primarily attributed to a capacity increase of 1,592 MW over the past year and improved CUF. Adani Green Energy maintains an industry-leading EBITDA margin, supported by its exceptional operations and maintenance (O&M) practices, which enable higher electricity generation at reduced O&M costs.

As of September 2023, Adani Green Energy's run-rate EBITDA stands at a robust Rs. 7,645 crore, with a net debt-to-run-rate EBITDA ratio of 4.99x, compared to 5.9x in 2022. The ratio comfortably stays well below the specified covenant of 7.5x for the bonds of the holding company.