Adani stocks rally up to 9% as Japanese banks repose faith

Adani stocks continued to rally on Friday after it was reported that Japan’s biggest banks plan to maintain ties with billionaire Gautam Adani-led conglomerate despite US bribery charges. Adani Green shares were trading 9% higher in the morning while Adani Energy Solutions was up 8%. Adani Total Gas, Adani Power and NDTV were trading 3-5% higher each.

Japanese bank Mizuho Financial believes that the controversy won't have a long-lasting impact and plans to continue supporting Adani Group, Bloomberg reported. Similarly, Sumitomo Mitsui Financial and Mitsubishi UFJ Financial also have no plans to pull back and will be open to fresh financing if needed later, the report said.

In the meantime, Indian public sector banks, including the State Bank of India (SBI), Bank of India, and Union Bank of India, are said to be reviewing their exposure to the group, with private lenders such as ICICI Bank, Canara Bank, IDBI Bank, and RBL Bank also involved, according to a Reuters report.


A review would not necessarily entail any change in the lenders' credit approach with regards to the group.

A regulatory source aware of the development said from a banking system perspective there is no need to panic as no entity at this point is over exposed to the group.

SBI has the largest exposure to the Adani Group among Indian banks, with sanctioned loans of Rs 33,800 ($4 billion), according to IIFL Securities, a brokerage.

SBI won't stop lending to ongoing Adani projects that are nearing completion, sources said, but added the bank will exercise caution while disbursing loans to ensure all terms and conditions are being met by the group.

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Japanese banks maintain support

Japan’s biggest banks plan to maintain ties to billionaire Gautam Adani despite US bribery charges, even as other global firms including Barclays Plc are reassessing their exposure to the Indian conglomerate, according to Bloomberg.

Mizuho Financial Group Inc. expects the latest saga surrounding Adani won’t have a long-lasting impact and intends to continue supporting the group, according to people familiar with the matter. Sumitomo Mitsui Financial Group Inc. and Mitsubishi UFJ Financial Group Inc. also have no plans to pull back and will be open to fresh financing if needed later, people familiar with the matter said.

The Japanese support underscores the divide among finance firms over Adani after he and others were charged with plotting a $250 million scheme to bribe India government officials to win solar energy contracts. Adani’s massive ports-to-power group has denied the charges and called the allegations baseless. Its representatives have been meeting with lenders and investors to reassure them and explain its stance on the matter.

While it’s unlikely there’ll be new financing requests by the group for now, some global banks that are concerned about reputational risk are curbing their exposure to one of India’s biggest conglomerates. The capital-rich Japanese lenders take comfort that they’re backing cash-generative assets. Adani has strong government ties and any legal processes brought by the US will take a long time, according to the people familiar.

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