Japanese Banks Sticking With Adani as Jefferies, Barclays Review Ties

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Japan’s biggest banks plan to maintain ties to billionaire Gautam Adani despite US bribery charges, even as other global firms including Jefferies Financial Group Inc and Barclays Plc are reassessing their exposure to the Indian conglomerate.

Mizuho Financial Group Inc. expects the latest saga surrounding Adani won’t have a long-lasting impact and intends to continue supporting the group, according to people familiar with the matter. Sumitomo Mitsui Financial Group Inc. and Mitsubishi UFJ Financial Group Inc. also have no plans to pull back and will be open to fresh financing if needed later, people familiar with the matter said.

Tokyo-based spokespeople for all three lenders declined to comment. An Adani Group representative didn’t comment immediately.

The Japanese support underscores the divide among finance firms over Adani after he and others were charged with plotting a $250 million scheme to bribe India government officials to win solar energy contracts. Adani’s massive ports-to-power group has denied the charges and called the allegations baseless. Its representatives have been meeting with lenders and investors to reassure them and explain its stance on the matter.

While it’s unlikely there’ll be new financing requests by the group for now, some global banks that are concerned about reputational risk are curbing their exposure to one of India’s biggest conglomerates. The capital-rich Japanese lenders take comfort that they’re backing cash-generative assets. Adani has strong government ties and any legal processes brought by the US will take a long time, according to the people familiar.

“Drawing from their experiences in Southeast Asia in the ‘90s, Japanese banks have developed sophisticated frameworks for evaluating emerging-market risks,” Ben Charoenwong, an associate finance professor at Insead in Singapore, said about the lenders’ risk tolerance in the aftermath of the Asian Financial Crisis. “Banks like MUFG and SMBC, which view India as a crucial growth market, are unlikely to substantially reduce their overall India exposure” though they may tighten processes or raise risk premiums for certain deals.

Shares of Adani Green Energy Ltd. rose as much as 15% on Friday, the most since Feb. 7, on hopes of continued funding support from some banks, while Adani Energy Solutions Ltd. rallied more than 13%.

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