Barclays turn cautious of Adani after Hindenburg Report

18 Jul 2023 , 11:56 AM

Barclays Plc has served as Gautam Adani’s go-to bank for more than ten years, capitalizing on a partnership that was established when the developing conglomerate was only being worked with by a small number of international companies.

All of that has changed as a result of a report published by short-seller Hindenburg Research in January, which prompted the bank to reduce its exposure and left a gap in the Indian business, which had long been a major source of the company’s Asian development.

According to news reports, top executives are scrutinizing their relationships with Adani and becoming more wary about taking on new clients while a regulatory investigation, which is meant to complete next month, is ongoing.

Barclays hasn’t given up on the group, but according to the reports, it has negotiated loan payback on occasion, including finance for a sizable cement deal with Holcim AG last year.

The difficulties faced by Adani highlight the precarious balance that international banks must maintain as they assist profitable clients in markets like India. India has been the main contributor to the more than doubling of Barclays’ Asian revenue over the past six years.

Adani might prove to be a winner, and banks like to be associated with winners, according to emerging markets investor Mark Mobius of Mobius Capital Partners LLP. ‘It’s a very difficult decision,’ he added. Because of the size of the funds, it is challenging for a bank to end the connection.

Adani has refuted Hindenburg’s accusations. Barclays is one of the group’s 12 main relationship banks, according to a statement to Bloomberg News, and all have safe assets and exposure to Adani portfolio firms. Adani cited bank financing last month for a data centre as evidence that the lenders still have a ‘strong association with us’ in spite of the Hindenburg report. 

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