Adani Enterprises FPO fully subscribed on final day

Mumbai: The ₹20,000-crore follow-on public offering (FPO) of Adani Enterprises Ltd (AEL) was fully subscribed on the final day of the offer Tuesday, January 31, thanks to late demand from family offices, corporates, and foreign investors. The issue - India's biggest FPO - was subscribed 1.12 times at close. Domestic institutions, including mutual funds, and most retail investors stayed away from the FPO as the issue price was above the Adani Enterprises stock price.

Most of the bids came in on Tuesday. The FPO opened on January 27 and was just 3% subscribed by January 30, after the Hindenburg Research report saw Adani Group shares tumbling.

The flagship entity of the Adani Group got bids for 50.9 million shares against an offer size of 45.5 million shares, excluding the anchor book, at a price range of ₹3,112-3,276 apiece. Adani Enterprises closed 2.8% higher at ₹2,973.90 Tuesday on the BSE, having dropped for two days in a row. The benchmark Sensex ended almost flat Tuesday.

The FPO consisted of partly paid shares for which investors had to pay 50% of the offer price upfront and the remaining on one or more subsequent calls, as decided by the board. A discount of ₹64 apiece was offered to retail investors.

The portion reserved for qualified institutional buyers (QIBs) was subscribed 1.26 times, entirely by foreign institutions. Non-institutional investors, including high-net-worth individuals and corporates, saw bids for 3.32 times the shares set aside for them. The stocks for retail investors and employees were undersubscribed. Retail investors bid for 12% of the shares, whereas it was 54% for the employees' quota.


Basis of Share Allotment by Feb 3
Investors were wary after the sell-off in the group's shares over the past three trading sessions following US-based short seller Hindenburg Research's adverse report on the conglomerate on January 24. Since the report's release, the stock has fallen 14%.

On Monday, Abu Dhabi-headquartered International Holding Company (IHC) announced an investment commitment of $400 million, or roughly Rs 3,200 crore, in the FPO through subsidiary Green Transmission Investment Holding RSC.

Bankers said they received commitments of $1-1.1 billion (Rs 8,100-9,000 crore) from investors in the Middle East and Southeast Asia on Monday. The names of the other big investors who bid in the FPO could not be ascertained.

Last Wednesday, the company raised Rs 5,985 crore from anchor investors ahead of the FPO by allotting 18.3 million shares at Rs 3,276 each to 33 institutional investors. The basis of the allotment of shares would be finalised by February 3, and these will be credited to the demat accounts by February 7. The new shares will be available for trading on February 8.

Promoters' Stake
The share sale could result in the stakes of promoters, led by Gautam Adani, falling 3.5%. As of September 2022, the promoters owned 72.63% of Adani Enterprises, while the remaining 27.37% was with public shareholders.

According to the offer documents, the company proposes to use Rs 4,165 crore of the issue proceeds to repay the debt owed by the company and three subsidiaries - Adani Airport Holdings, Adani Road Transport and Mundra Solar. It intends to spend Rs 10,869 crore for projects such as establishing a green hydrogen ecosystem, developing facilities at the airports it manages and the construction of a greenfield expressway. Adani Enterprises had Rs 41,191 crore of consolidated debt on September 30, 2022.

Anchor Book
Some of the institutional investors that subscribed to the anchor book include Maybank Securities, Winro Commercial, ELM Park Fund, Dovetail India Fund and Belgrave Investment Fund, Life Insurance Corporation of India (LIC), Abu Dhabi Investment Authority, Goldman Sachs, Nomura, Societe Generale, Jupiter, BNP Paribas, Al Mehwar, Citigroup and Morgan Stanley.

Besides LIC, domestic institutions that subscribed to the anchor book include SBI Employee Pension Fund, HDFC Life and SBI Life. Local mutual funds did not participate.