Adani Power looks to refinance existing loans to reduce cost of debt

Private power producer Adani Power looks to refinance existing loans to reduce the cost of debt, the company has informed analysts. It is likely to explore international wholesale banking options. 

Top officials from the Gautam Adani-promoted group’s three energy companies — Adani Power, Adani Transmission, and Adani Green — on Thursday met power sector analysts in Ahmedabad, where details of the power company’s debt refinancing were shared. An email query sent to Adani Power on Friday remained unanswered.

“It plans to refinance its existing debt with low-cost international wholesale banking,” said an analyst who attended the meet.  

Adani Power expects to reduce its annual interest cost to Rs 1,900 crore, from the current Rs 3,800 crore through low cost funding, the company told analysts at the meeting. The exercise is expected to reduce interest rate for the company by 500-600 basis points. The company said its current average debt maturity was six years, which it plans to extend to 12 years.

Finance cost for Adani Power is showing signs of decline. For the quarter ended September, Adani Power’s finance cost was at Rs 1,326.33 crore, which was lower from Rs 1,406.72 crore in the same period a year ago. 

In an investor presentation in November, Adani Power said it diversified its financing sources in the past three years. 

As of March 2016, public sector banks contributed to more than half of Adani Power’s debt market exposure. This reduced to 42 per cent as of March 2019, with an increase in exposure to bonds. Adani Power’s bond-based fund raising share rose to 25 per cent in 2019, against 14 per cent in March 2016. 

As of June 2019, Adani Power had total external long-term debt outstanding at Rs 37,374 crore. 

In addition to this, group-supported loans were at Rs 5,324 crore and another Rs 5,150 crore were secured loans.