Gautam Adani’s go-to bankers at Barclays turn cautious after Hindenburg

livemint.com:

Barclays Plc has been the go-to bank for Indian billionaire Gautam Adani, leveraging a relationship forged when only a few global firms were working with the emerging conglomerate. An explosive report by short-seller Hindenburg Research in January has changed all that, prompting the bank to pare its exposure, leaving a hole in an Indian business that’s been a key driver of the firm’s Asian growth for years. Executives at the highest levels are scrutinizing ties with Adani, turning more cautious about adding new business pending a regulatory probe that’s supposed to end next month, according to people familiar with the matter.

While Barclays hasn’t closed the door on the group, it’s negotiated repayment on some loans, including financing for a massive cement deal last year with Holcim AG, the people said. Adani’s troubles underscore the delicate balance facing global banks as they support lucrative but potentially risky clients in markets like India. Barclays’ revenue from Asia has more than doubled in the last six years, with India leading the way.

“It’s a very tough choice since Adani may turn out to be a winner and the banks certainly want to be associated with winners," said emerging markets investor Mark Mobius of Mobius Capital Partners LLP. “The amounts are so large it is difficult for a bank to exit the relationship."  The pull-back is creating tensions within the firm, said the people, who asked not to be identified discussing private matters. Bankers in India want to revive the lucrative Adani relationship after business from the group dried up.

Executives in London are more cautious, citing the reputational risks, they said. Adani has denied the allegations made by Hindenburg. The group said in a statement to