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Robeco Institutional Asset Management BV and the investment arm of Banque Lombard Odier & Cie SA were among buyers in Adani Green Energy Ltd.’s recent green bond sale, a sign of confidence for the renewable energy business even as some observers raise environmental concerns about the wider Adani group.

Adani Green and associated firms raised $409 million this month in the conglomerate’s first debt sale since a damaging short-seller report last year. The 18-year bond attracted orders worth seven times the deal size, with proceeds used to redeem a $500 million green note maturing in December.

As a producer of renewable energy, Adani Green has emerged as one of the more appealing arms of the group for investors concerned about financing planet-warming CO2 emissions. Strong demand for the latest issue allowed Adani to secure cheaper terms. On the equity side, Adani Green’s shares have rebounded faster than those of the group’s flagship firm this year, gaining 15%, compared with 12% for Adani Enterprises Ltd.

At the same time, green finance watchdogs including Anthropocene Fixed Income Institute and the Toxic Bonds Initiative have warned there’s a lack of alignment for sustainability targets across the Adani group, whose massive holdings span airports to coal. Last year, KLP, Norway’s largest pension fund, said it sold its Adani Green shares after it found the company was using its stock as collateral to finance coal mining.

The recent bond sale closed just before US prosecutors widened a bribery probe into Adani group companies. The circumstances around the probe, which relates to an energy project, seem to point to Adani Green, JPMorgan analyst Love Sharma wrote in a note last week.

The Adani Group has vigorously denied the potential bribery allegations. 

The strong demand for the new bond shows that investors understand proceeds will “absolutely, 100%” be used for clean energy, said Adani Green executive director Sagar Adani. 

Robeco, which owns both the new and maturing bonds, was satisfied Adani Green’s cashflow and investments were targeted for green activities, according to a person familiar with the matter. A spokesperson for the Dutch firm declined to comment directly on the new debt. Lombard Odier, which holds the bonds through Lombard Odier Investment Managers, declined to comment.

Neuberger Berman Group LLC, which bought the Adani Green debt maturing in December, didn’t buy the latest notes because the issue size was below its liquidity threshold, said Gui Xiong Teo, a senior corporate analyst for emerging market debt at Neuberger Berman in Singapore.

Adani Green’s green bonds follow well-recognized international principles and reporting standards, which “significantly reduces risks of greenwashing,” he said.

Still, some investors passed on the deal. Abrdn plc, which has been targeted by green activists for holding Adani bonds, didn’t buy into the latest sale, according to people familiar with the matter. 

A spokesperson for the money manager declined to comment on Adani Green directly, saying the firm considers market conditions, return potential and ESG credentials among other factors when it makes investment decisions. 

The new bond sale was led by banks including Barclays Plc and Deutsche Bank AG. The 6.7% note maturing in 2042 was indicated at 96.7 on Wednesday, according to data compiled by Bloomberg. 

--With assistance from William Mathis, Akshat Rathi, Ameya Karve, Harry Suhartono and John Cheng.

(Updates to say bonds held by Lombard’s money management arm)

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