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Adani Airport Holdings is raising up to USD 500 million (about INR 3,690 crore) through an overseas bond sale, as it accelerates the modernisation of the airports in Ahmedabad, Lucknow and Mangaluru amid a resurgence in air traffic due to the opening up of the economy.
The final amount could be anything between USD 350 million and USD 500 million depending on the requirement, pricing and subscription demand, three people familiar with the matter said. The Adani Group company, which has the mandate to operate and modernise these airports, may launch the bond sale in the next two weeks. The paper is likely to have a five-year maturity. “The bond sale was expected this week, but it has been pushed due to the Evergrande crisis,” one of the people told ET, referring to the Chinese real estate group’s failure to pay interest on its huge debt.
The conglomerate is expected to raise $500 million through a private placement of shares in Adani Airports Holdings before an eventual initial public offering.
Standard Chartered, Deutsche Bank, MUFG and Barclays are among the banks helping the company raise international money. The bonds are expected to be rated as “high-yield”, which is below the investment grade. Adani Airport did not comment. The banks could not be contacted immediately.The crisis at China’s Evergrande Group has had a ripple effect, rattling markets globally this week with investors seeking the safety of investment. Of late, the crisis appears receding with Chinese authorities infusing liquidity into the system to calm nerves.
Adani Airport is a subsidiary of Adani Enterprises, the flagship company of the Adani Group, which had obtained the mandate to modernise and operate six airports — Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram — for 50 years through a globally competitive tendering process conducted by the Airports Authority of India.
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Of these, it took over the operations of Ahmedabad, Lucknow and Mangaluru last year. Separately, the company has acquired a majority stake in Mumbai International Airport and took its management control in July. It also has the mandate to develop a greenfield international airport in Navi Mumbai. India’s domestic air travel demand is recovering with the economy reopening. “While the pace of domestic traffic recovery has moderated in September due to the element of seasonality, it is expected to pick up strongly with the upcoming festive season,” Centrum Equity Research wrote in a report on Thursday. The recovery is likely to be gradual in the near term.Air fares are expected to rise steadily, growing by a high single-digit in the December quarter. Business travel is seeing early signs of recovery though it is still at 25 per cent of pre-Covid levels. Airport businesses are accordingly readying for future business potential. Demand revival is likely to continue through the upcoming festive season with the capacity cap for airlines also lifted to 85 per cent (likely to increase to 100 per cent by Dec-21), Centrum said.