Gautam Adani faced a margin call of more than $500mn on a $1.1bn share-backed loan, prompting the Indian tycoon to repay the whole debt, according to four people with direct knowledge of the matter.
The repayment was designed to avoid further damage to investor confidence shaken by fraud allegations raised by US short seller Hindenburg, said the people, who spoke under the condition of anonymity.
The lenders, which included Barclays, Citigroup and Deutsche Bank, requested last week that the billionaire top up the amount of stock pledged against the loan after shares of his listed companies fell sharply. But as the shares continued to slide, Barclays informed Adani of a margin call equivalent to 50 per cent of the loan in cash, they said.
Rather than post cash against the loan, which did not mature until September 2024, the Adani Group’s founder and his family opted to repay it completely. Adani has not disclosed the source of the funds used to repay the loan.
Adani Group said it did not receive a formal request for a margin call. The full loan was repaid early “per our prepayment planning”, the company added.
Adani’s empire, which spans airports to energy, has been reeling since New York-based Hindenburg last month accused it of accounting fraud and stock price manipulation. Adani has denied the claims.
As it seeks to arrest the crisis, the indebted group has moved to dispel fears that it is under pressure to cover losses on margin loans. It has dismissed claims circulating in Indian media to that effect as “market rumours”.
On Monday, Adani announced the early repayment of the loan in full, pitching it as a proactive move to reduce leverage.
Adani declined to specify which corporate or personal entity was the borrower on the $1.1bn loan, but referred the Financial Times to a statement released earlier this week that said the prepayment was “in continuation of the promoters’ commitment to reduce the overall promoter leverage”. In India, promoters refer to founders or the people controlling a company.
Other banks in the lending group included JPMorgan and Japan’s SMBC Group. All the banks declined to comment.
The early repayment has had a “calming effect” and eased internal pressures at international lenders, which are facing demands from their credit and risk management committees to reduce their exposure to the conglomerate, one of the people said.
Adani said the repayment would release 168mn shares in Adani Ports, 27mn in Adani Green Energy and 12mn in Adani Transmission.