With support from banks waning — both foreign and domestic — the Adani group said to be engaging with global hedge funds and stress funds investors for capital infusion. Highly placed sources say that for the initial round of funding, the group has reached out to some of the large US-based hedge funds such as Farallon Capital, Davidson Kempner Capital Management and Baupost Group.

This is to meet their immediate capital requirement. It is gathered that negotiations are near the final stages with Farallon Capital for nearly $500 million and this would likely mark the first tranche of capital (a mix of equity and debt) that would flow into the Adani group since its failed follow-on public issue (FPO). “In about a week or ten days, it is expected that this investment would come through,” said a highly placed source. An email sent to Adani group and Farallon Capital remained unanswered till press time.

Conditional capital

One of the key conditions laid down by potential investors is that the shares should be free of encumbrances. To satisfy this stipulation, the group recently announced that it has re-paid nearly ₹9,250 crore or $1.1 billion of loans its promoters had availed by pledging shares in its group companies namely Adani Ports, Adani Green Energy and Adani Transmission. These loans were due to repayment in September. However, nearly a quarter of the promoters’ shareholding in Adani Power remains pledged while 2.66 per cent of promoter holding in Adani Enterprises is under encumbrances. “Potential investors may insist that shares of all group companies should be free of any pledge,” said a person aware of the matter.

Meanwhile, highly placed sources say the promoters and their associated entities may have resorted to short-term funding to finance the pre-payment. Oaktree Capital Management and Davidson Kempner Capital Management, both specialised in special situation funds or stress funds and said to have lapped up Adani group bonds this week, may have bailed out the promoters by extending short-term credit options to prepay their debt obligations.

“These are high-risk taking investors and they often take a bet on the individual rather than the business,” said a person quoted above. However, given that the debt may have been raised at the promoter level, it is unlikely to impact the leverage of listed group companies.