AdaniConneX In Talks To Raise $900-950 Mn In Offshore Loan To Expand Data Centres

SUMMARY

AdaniConneX is borrowing this money to expand its data centres to places like Hyderabad, Chennai, Noida, and Pune. It wants to set up 1 GW of data centre capacity over the next decade

The loan is structured as a six-year offshore loan and its interest rate is set at 250-260 basis points above the Secured Overnight Financing Rate (SOFR)

last year, AdaniConneX raised $213 million from ING Bank, Mizuho Bank, MUFG Bank, Natixis, Standard Chartered Bank and SMBC to build two data centres with an aggregate capacity of 67 MW

AdaniConneX, a joint venture between Adani Enterprises and EdgeConneX, is in the final leg of discussions to raise $900-950 Mn (INR 7,500-7,920 Cr) via a six-year offshore loan from a group of eight lenders.

The lenders include MUFG Bank, Sumitomo Mitsui Banking Corp (SMBC) and Standard Chartered Bank, ET reported.

The loan agreement is expected to be signed early this week.

Other lenders in the deal include Societe Generale, Natixis, ING Bank, Intesa and KfW.

AdaniConneX planning to deploy the proceeds to expand its data centres to places like Hyderabad, Chennai, Noida and Pune. It wants to set up 1 GW of data centre capacity over the next decade.

The loan is structured as a six-year offshore loan and its interest rate is set at 250-260 basis points above the Secured Overnight Financing Rate (SOFR).

The SOFR is a benchmark interest rate that measures the cost of borrowing cash overnight collateralised by Treasury securities. Reportedly, the current SOFR rate is 5.3%.

It is pertinent to note that last year, AdaniConneX raised $213 Mn from ING Bank, Mizuho Bank, MUFG Bank, Natixis, Standard Chartered Bank and SMBC to build two data centres with an aggregate capacity of 67 MW, one in Chennai with 17 MW and one in Noida with 50W.

Not to mention, now they need a total of $5 Bn by 2030 for this data centre expansion. In 2021, the Adani Group started working in the data centre industry by teaming up with Edge Connex.

In March, they got $409 Mn by selling 18-year US dollar notes through Adani Green Energy Twenty-three Ltd, a joint venture between Adani Green Energy and TotalEnergies. They got the money at a 6.7% interest rate.

This comes close on the heels of a slew of companies intending to set up data centres in India.

Earlier this month, a report of Meta Platforms to set up its first data centre in India at the Reliance Industries (RIL) campus in Chennai was also reported.

Last year, US-based alternative investment firm Blackstone was in talks with Microsoft and Amazon to build data centres for them in India to meet the growing storage and processing demand.

Research firm Crisil says India’s data centre capacity is expected to grow from around 870 MW in FY22 to 1,700-1,800 MW by FY25.