Three Adani group companies have pledged more shares for State Bank of India (SBI) SBI.NS, a key lender to the Indian conglomerate whose listed entities have lost more than $100 billion in market value following a blistering report by a U.S. short seller.
Adani Ports and Special Economic Zone APSE.NS, Adani Transmission Ltd ADAI.NS and Adani Green Energy Ltd ADNA.NS have pledged shares in SBICAP Trustee Co, the firm said in a Bombay Stock Exchange filing on Friday.
The trustee, a unit of India’s largest state-owned lender SBI, said it had commitments for 1% of Adani Ports, 0.65% of Adani Transmission, 0.44% of Adani Green and 1.06% of Adani Green. , up from 0.68%.
The additional pledges are part of a $300 million letter of credit – issued by one bank to another bank as a guarantee for payments made – provided by SBI for Adani Group’s Carmichael coal mining project in Australia, the SBI statement said. The collateral is reviewed at the end of each month to assess whether it needs to be topped up due to any mark-to-market losses, SBI said in a statement.
Listed companies controlled by billionaire Gautam Adani have lost more than $100 billion in market value since January 24, when US short seller Hindenburg Research accused the conglomerate of stock manipulation and improper use of offshore tax havens.
The group rejected the allegations and denied any wrongdoing. SBI said that the share pledge was increased twice last year and the last one was done on February 8, 2023.
SBI’s total exposure to the group was 0.9% of its loan portfolio, or about 270 billion Indian rupees ($3.3 billion), Chairman Dinesh Kumar Khara said. “Such pledge of shares is only as additional collateral security over the assets of the project and SBI does not provide any additional funding for such pledge of shares,” SBI said in a statement.
India’s market regulator, the Securities and Exchange Board of India, is investigating Adani Group’s links to some investors in the conglomerate’s aborted share sale, sources told on Friday.
Fitch estimates that loans to all Adani group entities represent 0.8% to 1.2% of the total loans of Indian banks rated by the agency. Indian banks’ exposure to Adani is not enough to affect their credit profiles, two global rating agencies said.
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