Barclays Plc has served as Indian billionaire 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 an explosive 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 those familiar with the situation, 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 sources, it has negotiated loan payback on occasion, including finance for a sizable cement deal with Holcim AG last year.
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Difficulties faced by Gautam Adani:
The difficulties faced by Gautam Adani highlight the precarious balance that international banks must maintain as they assist profitable but possibly dangerous 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.
The people, who wanted not to be named because they were discussing personal affairs, claimed that the pullback is causing difficulties within the company. After losing out on business from the group, Indian bankers seek to rekindle their lucrative connection with Adani. Executives in London are reportedly being more cautious due to reputational hazards.
Gautam Adani denied 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 the wake of the Hindenburg report. That loan relationship, which also included ING Bank NV, Mizuho Bank, MUFG Bank, Natixis SA, Standard Chartered Plc, and Sumitomo Mitsui Banking Corp., did not include Barclays.
While several international companies have stepped up in recent years to assist fund Gautam Adani as the billionaire’s empire grew, Barclays’ ties to the group stand out. These companies include Standard Chartered, Mitsubishi UFJ Financial Group Inc., and Deutsche Bank AG. The UK Company was one of the first foreign bankers to develop connections with Adani in India, and it is the only major bank with an Asia-Pacific headquarters there.
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