Companies

PSU banks to extend ₹8,500-cr finance for RInfra-Adani Transmission deal

ksenia kondratieva Mumbai | Updated on August 13, 2018 Published on August 13, 2018

An SBI-led consortium of several PSU banks is likely to advance ₹8,500 crore to Gautam Adani-controlled Adani Transmission Ltd (ATL) for closing the ₹18,800-crore transaction with Reliance Infrastructure for Mumbai power generation and transmission business, the industry sources said.

While SBI leads the lenders’ group with a loan of ₹3,000 crore, the remaining amount is shared between several other PSU banks, including Bank of Baroda and Union Bank, sources said, adding that some of the funding will be provided by private sector banks.

Adani Group spokesperson said the promoters of ATL “have infused a consideration to part fund” the transaction through an “equity equivalent instrument”.

“This instrument is subordinated in its rights to ordinary equity. The instrument accordingly has been classified as part of shareholders equity in the books of ATL accounts. The rating agencies too have accepted the same,” he said.

The spokesperson added ATL has the necessary shareholders’ approvals to raise capital through various options.

The company’s board has last week approved subscribing to the securities for an amount not exceeding ₹5,000 crore as well as to NCDs on a private placement basis, ATL said in a regulatory filing. Earlier in May, the board has approved raising up to ₹5,000 crore through various instruments including issuance of equity shares and convertible bonds through QIP.

The queries sent to SBI, Union Bank and Bank of Baroda did not elicit any response.

The development comes at the time when banks, especially PSUs, are reluctant to fund infrastructure sector projects.

“Bank are selective in terms of projects and sponsors. At the same time transmission lines are relatively stable assets without any volatility in cash flows,” Shubham Jain, Vice-President of ICRA, told BusinessLine.

He added that despite overall lending to the infrastructure sector has declined in the recent years, the large public banks, at least those that are not under prompt corrective action (PCA) framework, do have funds and they are looking for “safer bets” where they are looking to deploy them.

Adani Transmission and Reliance Infrastructure have signed a binding share purchase agreement for RInfra’s integrated business of generation, transmission and distribution of power for Mumbai in December 2017.

The total deal value was set at ₹13,251 crore; however, considering the regulatory assets under approval estimated at ₹5,000 crore and net working capital on closing estimated at ₹550 crore, the total consideration value has reached ₹18,800 crore, RInfra said.

Adani Transmission has already advanced ₹2,602 crore to RInfra as part of the deal, as per the company’s regulatory filings.

Published on August 13, 2018
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