As lead lender State Bank of India (SBI) looks to sell off a significant portion of the Rs 20,000 crore credit line it had approved earlier this year for the conglomerate's petrochemicals debut, leading public and private sector banks have lined up to take a bite out of Adani Enterprises' rare greenfield project finance loan.
According to sources, the $4 billion polyvinyl chloride (PVC) project in Mundra, Gujarat, has either committed or is in the process of receiving funding from Bank of Baroda (BoB), Punjab National Bank (PNB), Union Bank of India, Central Bank of India, ICICI Bank, and Axis Bank.
Earlier this year, SBI set the pricing of the 15-year loan at 9.25%.
A few months ago, SBI was the only underwriter for this loan, and it has already paid out many hundred crores. As part of their strategy, they intend to downsell it to other banks.
According to an The Economic Times report, the bank intends to keep Rs 5,000–7,000 crore and downsell the remaining loan, which would ultimately be paid out by other banks.
The Adani Group is making its first entrance into the petrochemical industry with the 2 million tonne PVC plan, which is anticipated to increase India's ability to produce the plastic polymer used in the production of raincoats, wires, plastic pipes, shower curtains, and medical equipment, among other items.
“This is a huge greenfield project and an interesting one for banks to be part of because this is a highly rated credit. The commodity to be manufactured, the amount of the loan, and the credit rating of the group are why so many banks are open to taking a share,” The Economic Times reported, quoting a source.
Officials at the Adani Group, SBI, BoB, PNB, Union Bank, Central Bank, ICICI, and Axis Bank did not respond to separate emails seeking comment.
Domestic PVC manufacturing would help India reduce its reliance on imports, even as economic growth and increased infrastructure spending are likely to boost demand for PVC. Adani plans to complete the first phase of the project by late 2026.
“The final securitisation papers for this loan are being drawn, after which individual banks, depending on their internal approvals, will each take some part. These limits will be released by SBI and will be finally drawn down by the Adani Group from those banks whenever they need the money,” The Economic Times reports.
Banks anticipate that the loan distribution process will be completed within a month. Smaller banks are expected to accept loan amounts ranging from Rs 1000 crore to Rs 2000 crore on their books.
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