The Adani group has cobbled a plan to rescue the Rs 20,000-crore follow-on public offer (FPO) of Adani Enterprises that seemed to teeter on a precipice after investors showed little appetite for the stock flotation which received bids for around 14 lakh shares, or just over 3 per cent of the 4.55 crore shares on offer.
The issue closes on Tuesday.
On Monday, the Abu Dhabi-based International Holding Company (IHC), which is closely linked to the royal family, announced that it would invest $400 million (around Rs 3,260 crore) in the FPO which has been battered by accusations of shenanigans in the Adani group that were levelled by Hindenburg Research, a US-based short seller, last week.
The Adanis have said the allegations are “not merely an unwarranted attack on any specific company but a calculated attack on India....”
IHC will pick up 16 per cent of the shares on offer in the FPO.
IHC will be pumping money into the FPO through its subsidiary Green Transmission Investment Holding RSC Ltd. A statement from IHC said this was its first investment of the year. It aims to scale up and diversify its investments locally and internationally, focusing on Europe, Africa, Asia, and South America Markets in 2023.
Prime Minister Narendra Modi welcoming Sheikh Mohamed bin Zayed Al Nahyan, the UAE President and the ruler of Abu Dhabi and the then crown prince, in 2017 in New Delhi. India and the UAE have excellent relations. PTI picture
“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 IHC chief executive officer Syed Basar Shueb.
The Adanis have already raised Rs 5,985 crore from 30 marquee institutional investors ahead of the FPO at the upper end of the Rs 3112-3276 per share price band.
After the commitment from the Abu Dhabi fund, the Adanis have sewn up close to half of the amount that they were planning to raise through the FPO.
The Adanis have been confident from the start that they will be able to raise funds from a clutch of institutions even if retail investors remain spooked by the fact that the Adani Enterprises stock closed on the bourses 7.5 per cent short of the floor price for the FPO.
The Adani Enterprises stock rose 3.93 per cent in Monday’s trading to Rs 2869.85 on the National Stock Exchange and by 4.21 per cent to Rs 2878.50 on the BSE.
Observers said the issue can sail through if it garners at least 90 per cent subscription. If it sinks below that threshold, the Adanis will have the choice to revise the price band and extend the closure date by three days.
This may be unnecessary if the Adanis are able to persuade other institutions, including those in India, to stump up the money.
Market sources say it isn’t unusual for a company or its merchant bankers to begin backroom parleys with a variety of entities during a share flotation at the first sign of trouble.
LIC has already invested Rs 300 crore in the FPO through the anchor book among the domestic institutions. Some reports said the life insurer had indicated that it would not put up any more money in the share float. With Adani group shares falling in the bourses, the LIC counter had also come under pressure because of worries over its exposure to the conglomerate.
The insurer said on Monday that it had an exposure of Rs 36,474.78 crore to the Adani group’s debt and equity, and the amount is less than one per cent of the total investments.
LIC’s total assets under management stood at over Rs41.66 lakh crore as of September 2022.
“Our total holding in the Adani group companies under equity and debt as on date is Rs 36,474.78 crore. This was Rs 35,917.31 crore as of December 31, 2022. Total purchase value of these equities of the group companies, bought over the past many years, is Rs 30,127 crore and the market value for the same at close of market hours on January 27, 2023, was Rs 56,142 crore,” LIC said in a tweet.
The war of words between Hindenburg Research and the Adani group escalated after the US short seller denounced the Adani group’s 413-pageresponse to its litany of accusations as a blatant attempt to stoke a nationalist narrative while ducking straight answers to the 88 pointed questions that it had lobbed last week.
It has promised to come out with more revelations over the next few days — which suggests that it will keep up the heat on the Adanis until regulators start investigating the charges.
