Adani Ent FPO subscribed 3% on Day 2, can the mega issue sail through?

The Rs 20,000-crore secondary share sale of shares by Adani Enterprises is struggling even as the stock managed to recoup partial losses.

The FPO was subscribed 3% on the Day 2, with the company receiving bids for 13,98,516 shares against the total issue size of 4,55,06,791 shares. Despite rebounding in trade on Monday after the massive sell-off last week, shares of Adani Enterprises are trading below the floor price of the FPO.

The stock ended nearly 5% higher on the NSE at Rs 2,892.85, whereas the price band for the FPO is Rs 3,112-3,276 a share.

The portion set aside for retail investors was subscribed 4%, with the company receiving bids for 9,76,944 shares compared to the issue size of 2,29,08,464 shares.

High networth individuals bid for 9,76,944 shares against the portion of 96,16,323 shares set aside for them.

The response from qualified institutional investors remained muted. In this category, the company got bids for just 4,576 shares against 1,28,21,336 shares on offer.

At a time when the FPO is struggling to gain interest, Abu Dhabi-based diversified conglomerate International Holding Co (IHC) came to Adani’s rescue and said it will invest $400 million into the FPO by subscribing to 16% of the total issue.

"Our interest in Adani Group is driven by our confidence and belief in the fundamentals of Adani Enterprises Ltd; we see a strong potential for growth from a long-term perspective and added value to our shareholders," said Syed Basar Shueb, Chief Executive Officer of IHC.

Given that Tuesday will be the last day for subscription, it remains doubtful on the success of the issue, pipped to be the largest-ever by a private company in India.

The group has assured that the FPO plan remains intact, but the response indicates that the company might have to give a relook to the offer price or the size of the FPO.

“The CFO is expressing confidence...But we need to see how the institutional interest pans out,” said Kranthi Bathini, market strategist at WealthMills Securities.

Adani Enterprises is the only stock to have rebounded. Adani Ports and SEZ, Adani Wilmar, Adani Power, Adani Green Energy, Adani Total Gas, and Adani Transmission shares ended flat to down 20%.

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