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India’s Adani to repay up to $790 million share-backed loans by March – sources

India’s Adani to repay up to $790 million share-backed loans by March – sources

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India's Adani to repay up to $790 million share-backed loans by March - sources

India’s Adani Group plans to prepay or repay share-backed loans worth $690 million to $790 million by March-end, two people with knowledge of the matter told Reuters, as the conglomerate seeks to burnish its credit profile after a short-seller attack.

The plan comes even as the group holds a fixed-income roadshow this week in Singapore and Hong Kong to shore up investor confidence amid share price falls and a regulatory probe. 

Adani Green Energy Ltd (ADNA.NS) also plans to refinance its 2024 bonds via an $800 million, three-year credit line, said the people, who declined to be identified as they were not authorised to speak with media.

The group presented both plans to bondholders in Hong Kong on Tuesday, the people said. The three-day roadshow is scheduled to end on Wednesday.

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An Adani group spokesperson did not immediately respond to a request for comment. Chief Financial Officer Jugeshinder Singh told Bloomberg News the group is not looking to refinance debt or raise capital.

Seven listed Adani group companies have lost more than $140 billion in market value since a Jan. 24 report by Hindenburg Research alleged stock manipulation and improper use of tax havens, and flagged concerns over debt levels.

Adani has rejected the allegations and denied wrongdoing.

Shares of flagship Adani Enterprises Ltd (ADEL.NS) were up 7.8% in morning trade, whereas Adani Green Energy was up 3.75%.

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Business

Pakistan, China agree to reopen border for trade, travel after three years

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Pakistan and China have agreed to revive trade and travel activities through the Khunjerab Pass from April 3 (Monday) after a hiatus of three years.

The Khujerab Pass, which is also the main route for the China Pakistan Economic Corridor (CPEC) activities, is usually used for trade and travel from April 1 to November 30. There was also a daily bus service that run from Sost Valley of Gilgit-Baltistan to China’s Xinjiang province.

However, the border crossing was closed in 2019 to prevent the spread of coronavirus. Since then, it was occasionally opened for transportation of emergency consignments from China to Pakistan on specific days.

Officials told media both sides had finalised arrangements to reopen the border, adding that the move will also restore the trade and other activities under the China-Pakistan Eco­nomic Corridor (CPEC).

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The closure of border had deprived several people from job, besides serving blows to the local business community that depends on the bilateral trade.

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India regulator probing some Adani offshore deals for possible rule violations: Sources

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 India’s market regulator is investigating possible violation of “related party” transaction rules in the Adani Group’s dealings with at least three offshore entities that have links to the brother of the conglomerate’s founder, two people said.

The three entities allegedly entered into several investment transactions with unlisted units of the ports-to-power conglomerate founded by billionaire Gautam Adani over the last 13 years, said the sources with direct knowledge of the matter. 

Vinod Adani, Gautam Adani’s brother, is either a beneficial owner, director or has links with those three offshore entities, said the two sources, adding the regulator, the Securities and Exchange Board of India (SEBI), is probing if lack of that disclosure violated “related party transaction” rules.

Under Indian laws, direct relatives, promoter groups and subsidiaries of listed companies are considered related parties.

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A promoter group is defined as an entity that has a large shareholding in a listed company and can influence company policy.

Transactions between such entities have to be disclosed in regulatory and public filings and require shareholder approval above a specified threshold. Violations typically attract monetary fines.

An e-mail to SEBI requesting comment was not answered. SEBI chairperson Madhabi Puri Buch declined to comment on the Adani investigations at a news conference on Wednesday.

An Adani Group spokesperson said Vinod Adani is a member of the Adani family and is part of the promoter group, but he does not hold any managerial position in any of the listed Adani entities or their subsidiaries.

“This fact, like all other material information required to be reported, has been disclosed to the regulatory authorities in the past and also as and when required,” the spokesperson added, without commenting on the regulatory probe into offshore entities.

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Vinod Adani could not be reached for comment. Requests for comment sent to his holding company in Dubai, Adani Global Investment DMCC, were not responded to.

The probe comes after US short-seller Hindenburg Research’s Jan 24 report alleging improper use of tax havens and stock manipulation by Adani Group, among other things – charges it has denied.

Hindenburg’s report eroded more than US$100 billion in the value of shares in Adani group of companies.

India’s Supreme Court asked SEBI in March to investigate the Adani Group for any lapses related to public shareholding, related party rules or regulatory disclosures.

SEBI’s investigation into Adani’s possible ‘related party’ transactions with offshore entities with links to Vinod Adani has not been reported before.

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While SEBI investigations are continuing, top regulatory officials are due to give a status report to a court-appointed panel on Sunday, the two sources said, speaking on condition of anonymity as investigations are private.

“DISCLOSURE VIOLATIONS”

Hindenburg in its January report alleged that Vinod Adani entities have collectively moved “billions of dollars” into Adani’s publicly listed and private entities, often without required disclosure of the related party nature of the deals.

The Adani Group in a 413-page response to the allegations had said all transactions entered into by it with entities who qualify as “related parties” under Indian laws and accounting standards have been duly disclosed.

The three offshore entities with links to Vinod Adani being probed for “related party” transactions are Mauritius-based Krunal Trade and Investments and Gardenia Trade and Investments, and Electrogen Infra in Dubai.

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There was no response from Krunal, Gardenia and Electrogen Infra to emails requesting comment.

While the sources said that other similar transactions are also under regulatory examination, Reuters could not ascertain the names of other entities and their possible violation of “related party” transaction rules.

SEBI suspects there were “disclosure violations” on some of those transactions, said one of the two sources.

If proven, it could lead to monetary penalties and the matter may be referred to India’s Ministry of Corporate Affairs (MCA) for transactions that are beyond SEBI jurisdiction, the source said.

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Swiss watchmakers counting the clock until Chinese tourists return

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 Switzerland’s major luxury watch brands are cautiously optimistic that Chinese tourists will boost sales this year, if they return to Europe in large numbers after the easing of domestic Covid-19 restrictions.

Exports to China, a key market for watchmakers, contracted by 13.6 per cent in 2022 due to Beijing’s zero-Covid policy and the surge in infections when it was lifted at the end of the year. 

However, exports began to rebound in February – up 8.2 per cent year-on-year, according to the Federation of the Swiss Watch Industry.

“China will regain a positive dynamic,” the federation’s president Jean-Daniel Pasche, told AFP at the industry’s annual Watches and Wonders trade fair in Geneva, where 48 brands such as Rolex, Cartier and Patek Philippe were showing off their latest creations.

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With China reopening, many financial analysts have sharply raised their growth forecasts for the luxury sector as a whole in 2023.

During Covid-19 lockdowns, Chinese consumers built up significant savings, with HSBC analysts pointing to estimates of 6.6 trillion yuan (US$960 billion) in excess savings accumulated over the past three years.

Morgan Stanley analysts expect Chinese consumer spending on luxury goods to increase by 20 per cent in 2023.

According to the US investment bank’s estimates, luxury goods lovers in China made up about 60 per cent of the sector’s growth between 2000 and 2019.

Nearly three-quarters of their spending was done abroad, representing a windfall for Europe’s luxury boutiques.

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APPETITE FOR TRAVEL

That said, Chinese luxury consumers have become more accustomed to buying domestically during the Covid-19 pandemic.

The Swiss luxury goods giant Richemont sounded a note of caution.

“We see people going back to the stores with an appetite to buy and an appetite to travel,” said Cyrille Vigneron, chief executive of the group’s flagship brand Cartier.

“When a market so important is changing trajectory it has an impact” across the whole of Asia, he told a Watches and Wonders press conference.

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But it is hard to predict how the Chinese market will evolve in the short term, said Richemont chief finance officer Burkhart Grund, even though he remains “optimistic for the mid-term development of China”.

“We’ve seen good business during the Chinese New Year, but this has taken place not just in China,” he said, with outbound tourism returning to Asian countries including Thailand and Japan, and the first signs of Chinese tourists returning to Dubai.

“But in Europe, we don’t see it yet.”

FEW FLIGHTS

Guillaume de Seynes, a director at leather goods giant Hermes, had no doubt that the desire to return to Europe “is there”, but flights, “especially to France, are still limited”, he told AFP.

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For now, the top priorities at Hermes, which was presenting its new watches in Geneva, remain “to enlarge the average size” of its stores and “gradually increase our presence in China” by opening one boutique a year in a new city, he explained.

Hermes opened a new store in Nanjing in January, taking its number of outlets in China to 27.

In Lucerne, the top tourist destination in Switzerland, the tourism office hopes to see Chinese visitors returning soon “in summer or late spring”, depending on “the availability of visas and flight capacities”, said a spokeswoman for the picturesque city where browsing watch shops is on the must-do list.

Antoine Pin, director of Bulgari’s watch division, said: “We will firstly see wealthy clients coming from China … because the plane tickets are quite expensive.”

Jon Cox, an industry analyst with the Kepler Cheuvreux financial services company, told AFP: “For those companies with distribution in China, I expect a very strong year.

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“However, I would not be confident on companies relying on the Chinese returning to Europe this year. It will take a while for the Chinese to come back to Europe in the way they did before Covid.”

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