Good news for Gautam Adani as Rs 6.03 lakh crore company makes huge investment in THIS Adani-led firm

State-owned Life Insurance Corporation (LIC) on Thursday entirely subscribed to the Rs 5,000 crore bond issue of industrialist Gautam Adani-led Adani Ports and Special Economic Zone (APSEZ) at a coupon rate of 7.75 per cent. APSEZ approaches the domestic capital market to raise Rs 5,000 crores -- marking its largest-ever rupee-denominated bond issue -- for 15-year bonds. 

“There was only one bid from LIC and it was a pre-approved, privately negotiated transaction. No other bids were received, and since it wasn’t a market-based issuance, there was no green shoe option either,” said a source aware of the development, as quotes by Business Standard. 

The source added that the tenure was quite long which doesn't attract banks to invest. “And the tenure was quite long, which typically doesn’t attract banks. Perhaps other insurance firms or provident funds could have participated, but Adani approached only LIC for this transaction,” it said. 

The investment raised by the bond issuance will be utilised by the firm to refinance/repayment/prepayment of the debts. In addition, it can also be used to develop ports and related infrastructure. 

“Adani Ports, India’s largest private port operator, has raised Rs 5,000 crore through a 15-year domestic bond issuance at 7.75 per cent-- marking its longest-tenor and largest rupee debt deal to date. Such extended tenors are rare for private issuers in India’s bond market, where issuances typically cap at 10 years. The coupon, priced approximately 126 bps above comparable government securities, reflects strong and increasing investor appetite amid favourable market conditions,” said Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP. 

About APSEZ 

As per an official statement by the firm, APSEZ represents a large network of ports, operating a portfolio of 15 domestic ports/terminals with international presence at four global ports/terminals.