Adani Enterprises Ltd FPO
New Delhi, Jan. 29 (PTI) The group of the wealthiest Asian, Gautam Adani, expressed confidence that the Rs 20,000 crore follow-on share sale of its flagship company will go through despite a sharp decline in the stock price of the conglomerate following a critical report by a short seller based in the US.
The follow-on public offer (FPO) of Adani Enterprises Ltd. is the best vehicle for strategic institutional investors to own a piece of the conglomerate’s rapidly expanding airports, mining, roads, new energy, and data centre businesses, according to Group CFO Jugeshinder Singh, who also stated that no change in offering price or schedule is being considered due to temporary market volatility.
After Hindenburg Research claimed that the ports-to-energy-to-cement conglomerate had engaged in “brazen stock manipulation and accounting fraud” for decades, all seven Adani group companies’ stocks fell precipitously over the last two trading sessions, wiping out Rs 10.7 lakh crore of investor wealth.
Stock exchanges and market regulator SEBI are investigating the sell-off.
According to Singh in an interview with PTI, the group will publish a thorough response to the Hindenburg report “supplying “documented proof” to “clearly demonstrate that no study was conducted and that no investigative reporting was done. There is nothing but blatantly false portrayal of actual events.”
He gave the Hindenburg report as an example, which claimed that revenue inflation could be seen as a result of an asset being transferred to a private firm and being instantly written down by the private company.”
That is a clear example of misrepresenting our disclosures. That asset had already been written down and recorded as a loss by Adani Enterprises Ltd (AEL), at which point it was transferred to the private sector. As a linked party transaction, it was disclosed. Simply said, they (Hindenburg) stole half of it, making it intentional distortion and untruth. Additionally, the (Hindenburg) report is replete with them “said he. “They deceived on purpose.”
He assured that the AEL FPO will proceed as planned and that it will be fully subscribed by the conclusion of the offer period on January 31.
Just 1% of the shares in the second-largest share offering in Indian history were subscribed on Friday. According to data available from the BSE, only 4.7 lakh shares of AEL were subscribed for out of an offer of 4.55 crore.
All seven of the conglomerate’s listed companies suffered losses as a result of the Hindenburg report, and AEL dropped over 20% to trade below the offer price of its secondary sale. Shares are being offered by the company in the range of Rs 3,112 to Rs 3,276. Its share price on the BSE closed at Rs 2,762.15 on Friday.
“The FPO is fully trusted by all of our stakeholders, including bankers and investors. We are really optimistic about the FPO’s success “added he.
Adani Enterprises raised Rs 5,985 crore from anchor investors on Wednesday.
When asked why an investor would subscribe for the FPO when the same share is available on the open market at a lower price, Singh responded that AEL has a very limited free float, so while retail investors looking to purchase 50–100 shares can do so, a strategic institutional investor would not be able to locate the exact number of shares they require.
“As the free float is not there, that alternative is not there for an institutional investor who loves greater chunky holdings,” he said. “Increasing share liquidity and the free float is one of the main goals of the FPO,”
He added that strategic long-term institutional investors are not merely buying shares of AEL for their market value. “As an incubator, they are funding AEL. The value of AEL is mostly derived from the airports company it owns, the road business it operates, the new energy projects it undertakes, the data centre business it conducts, and the mining business it conducts. These companies are all doing incredibly well.”
The corporation wants to invest USD 50 billion over the next 10 years across the value chain in hydrogen, which is now housed by AEL. The airport operations, mining, data centres, roads, and logistics are also thriving. These companies will be separated between 2025 and 2028, once they have developed a fundamental investment profile and reached maturity.
“These enterprises will also be acquired by investors in AEL. They realise there is still long-term worth. Therefore, short-term price fluctuation has little impact on the value of the airports, highways, new energy initiatives, or data centres industries. The best choice for long-term investors seeking substantial positions is this (FPO) “added he.
The company aims to become one of the most affordable producers of hydrogen, a fuel with no carbon imprint that will be used in the future. Adani, 60, started as a trader and has been on a rapid diversification spree, expanding an empire centred on ports and coal mining to include airports, data centres, cement, and green energy. It is also betting heavily on its airport business with an aim to become the largest service base in the country outside of government services in the coming years. He currently also owns a media business.
The follow-on share offer, according to Singh, aims to increase the number of institutional, retail, and high-net-worth investors in order to increase the shareholder base.
By raising the free float, would help solve liquidity concerns, he added, adding that the business chose a primary issue over a rights issue because it wants to boost the participation of ordinary investors.
Along with paying down some of its debt, AEL will use the funds collected to finance green hydrogen projects, airport infrastructure, and greenfield motorways.
Regarding the stock sell-off, he expressed concern for the effect it will have on minority small investors and expressed the group’s hope that regulatory authorities would “look into” the “deliberate” attempt to produce “extra volatility”.
He remarked, without going into any detail, “That (sell-off) is something that should be looked into.”
Despite that, he continued, “we are sure that the offer will go through.
We are optimistic that the issue will be fully subscribed, he said when asked if the retail component will also be fully subscribed.
On Friday, qualified institutional buyers (QIBs) requested barely 2,656 shares compared to the 2.29 crore shares designated for them, while individual investors submitted bids for close to 4 lakh shares. In contrast to the 96.16 lakh shares that were offered, non-institutional investors requested 60,456 shares.
According to Singh, the group has put together a thorough rebuttal to the Hindenburg report, which the business will release in three days but allegedly took two years to compile.
In regards to filing a lawsuit against the US company, he added, “We have now learned that this report is a fabrication, which is one of the parts. Understanding the deliberate desire to harm Indian shareholders and businesses will be the second element. After conducting a legal assessment of that, a decision will be made.” PTI