Life Insurance Corporation of India (LIC), the country’s largest government-run insurer, has invested ₹5,000 crore in bonds issued by Adani Ports and Special Economic Zone. These bonds are known as non-convertible debentures (NCDs), and LIC bought the entire issue on its own.
The bond has a 15-year duration and offers a 7.75% interest rate, making it one of the longest-term bonds issued by the Adani Group recently. This investment helps Adani Ports manage its finances better by replacing short-term loans with long-term ones at lower interest rates.
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LIC already owns an 8.06% stake in Adani Ports. The money raised from this bond sale will be used for expansion, paying off existing loans, and other company needs.
The Adani Group, led by Gautam Adani, has been working to reduce borrowing costs by refinancing its debt. In the current financial year (FY25), its average borrowing cost has come down to 7.92% from 9.02% last year.
“This investment shows that LIC is willing to take large positions in corporate bonds,” said a fixed-income expert who didn’t want to be named. LIC had invested ₹80,000 crore in corporate bonds by the end of FY25.
Adani Ports is focusing on replacing expensive loans with longer-term and cheaper options to improve its cash flow and reduce interest payments.
As of March 31, the company’s total debt was ₹36,422 crore. Its earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at ₹20,471 crore. This means the company’s debt compared to its earnings has improved to a ratio of 1.78 times, better than 2.3 times in the previous year.
Adani Ports has a cargo handling capacity of 633 million metric tonnes (MMT) and handled 450 MMT in the last financial year. The company operates 15 ports in India and also owns port assets in Israel, Tanzania, Australia, and Sri Lanka.
Representatives from LIC and Adani Ports did not comment on the deal.
