SBI Mutual Fund to Anchor Adani Power’s $820 Million Rupee Bond Issue

State Bank of India’s mutual fund arm has committed to invest at least 10% in Adani Power’s nearly $820 million (75 billion rupees) rupee-denominated bond issue, which is expected to be launched later this week, according to three merchant bankers. SBI Mutual Fund, India’s largest mutual fund by assets under management, will act as one of the anchor investors with a commitment of 7.50 billion rupees.

The proposed fundraising will be the Adani Group’s largest-ever rupee bond sale, with Adani Power aiming to raise 28.60 billion rupees through a two-year option and 26.90 billion rupees via a three-year note. SBI Mutual Fund is expected to buy 4.50 billion rupees of the two-year paper and 3 billion rupees of the three-year bonds. The company will offer coupons of 8.00% and 8.20% for the two- and three-year bonds, while four- and five-year papers will carry coupons of 8.30% and 8.40%.

The remaining funds will be raised through four-year (6.75 billion rupees) and five-year (12.75 billion rupees) notes. The issue is arranged by Trust Investment Advisors, ICICI Bank and Axis Bank, while lenders are also supporting the bond sale through commitments of 3.31 billion rupees and 3 billion rupees. The bonds are rated ‘AA’ by Crisil and India Ratings, with coupon rates set to rise by 25 basis points for every rating downgrade.

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