IndianOil-Adani Gas Plans $161 Million Convertible-Bond Sale
(Bloomberg) -- IndianOil-Adani Gas Pvt. is planning to raise as much as 13.78 billion rupees ($161 million) from the sale of convertible bonds, according to people familiar with the matter, in what could be one of the largest such deals in India this year.
The company, a joint venture between state-run Indian Oil Corp. and Adani Total Gas Ltd. of billionaire Gautam Adani, plans to raise the money in four tranches via compulsorily convertible debentures that will be converted into equity on a specified date, one of the people said, asking not to be identified as the details are private.
The city gas distribution firm’s deal could be the biggest such hybrid instrument in the country since another Adani company ATL HVDC’s 9 billion rupees offering in March this year, data compiled by Bloomberg show. The route will help the company raise capital while deferring the dilution of existing equity to a later date when valuations are potentially more favorable.
It adds to the growing traction for bonds convertible and exchangeable into shares in Asia, as increased market volatility and high interest rates made these lower-coupon instruments increasingly attractive to issuers.
IndianOil-Adani Gas may raise 3.5 billion rupees each through CCDs due in one-, two- and three years, and the rest 3.28 billion rupees via such instruments maturing in four years, one of the people said. The interest rate on the CCD will be market determined, the person said, adding SBI Capital Markets Ltd. is the arranger to the deal which can happen as soon as this month.
The company didn’t respond to a request for comments sent on an email listed on its website, while a mobile number mentioned there was switched off. An IOC representative didn’t reply to a text message and phone calls, while a spokesperson for the Adani Group declined to comment.
The firm was formed to supply piped natural gas to industrial, commercial and residential segments and compressed natural gas to the transport sector. The fund raising comes as the government plans to increase the share of natural gas in the energy mix to 15% by 2030, from 6% at present.
IndianOil-Adani Gas reported a 23% rise in net income to 445 million rupees for the year ending March 2024, while its revenue from operations fell 14% during the period. In October, Crisil Ratings upgraded its rating on the long-term bank facilities of the company to AA-/Stable, citing an increase in the scale of operations, improved operating profitability and reducing project risk.
(Adds details in fourth paragraph. A previous version corrected headline and lead to say the bond is convertible.)
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