APSEZ bonds issue: DB backed out on green concerns

New Delhi: Deutsche Bank was denied internal clearance to act as an arranger for Adani Ports and Special Economic Zone’s $500 million bond issue that was launched on Tuesday due to environmental concerns flagged by the Frankfurt-headquartered lender’s sustainability committee, said people in the know.The Adani group company was in discussions with a group of international banks to act as arrangers for the issue, ET had reported on Monday. Deutsche was part of those discussions but pulled out later, these people said.“There are port-related environment concerns which are in conflict with sustainability goals of the bank”, a person directly briefed on the matter said.Adani Ports and Special Economic Zone has links to the controversial Carmichael coal mine in Australia’s Queensland province that the Adani group is developing. It is financing a rail link to the coal mine through one of its subsidiaries.Deutsche Bank declined to comment. Adani group had not responded to ET’s queries as of press time.This development did not come in the way of Adani Ports and Special Economic Zone’s bond issue, which launched successfully and oversubscribed 2-3 times by international investors on Tuesday. Citi and Bank of America Merrill Lynch were among the arrangers of the issue.“Such issues have cropped up in the past as well. This does not impact the company’s fund-raising plans,” an executive aware of Adani group’s thinking said. 80487294The Carmichael mine has become the subject of intense international scrutiny as environmental activists in Australia have raised concerns about the project. However, Adani has received government clearance in that country and has started construction of the mine.Deutsche Bank’s largest shareholder and the world’s largest asset manager, Blackrock, had made public its concerns about State Bank of India’s (SBI) financing of Adani’s Australian mining project in November. Blackrock is an investor in SBI’s bonds.Similar issues have also been raised by French asset management giant Amundi which recently warned SBI that it would evict its bonds from its portfolio if it were to finance the Adani mine. Amundi is also a shareholder of Deutsche Bank.The German lender set up a sustainability committee under the leadership of its chief executive officer Christian Sewing only last month. Its efforts to focus on sustainability practices has come in the midst of controversies and bribery allegations.The bank recently agreed to pay $125 million to US authorities to resolve allegations that it paid bribes to secure business in overseas jurisdictions such as China. The bank was booked for violations of the US Foreign Corrupt Practices Act.It also separately paid a $150 million fine in the US for being a banker to controversial businessman and sex offender Jeffrey Epstein.

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