IHC gives $400m to Adani Enterprises FPO

Adani Enterprises Limited (AEL) received a new investment commitment of $400 million from the Abu Dhabi-based International Holding Company (IHC). This takes the overall subscription figure for its ongoing follow-on public offer (FPO) close to 50% of the ₹10,000 crore target.

In a statement, IHC, an international investment company, announced that it would be investing in the Adani Enterprises FPO through its subsidiary, Green Transmission Investment Holding RSC Limited. IHC’s CEO, Syed Basar Shueb, stated that the company’s interest in Adani Group was driven by its confidence in the fundamentals of Adani Enterprises Ltd and the potential for long-term growth.

Moreover, sources indicate that AEL may soon receive further investment commitments of $1-1.1 billion from investors in the Middle East and Southeast Asia. The announcement is expected when the FPO closes.

However, the demand for the FPO has been underwhelming, with only 4% of the offered 4.55 crore shares subscribed to by investors. Adani Enterprises shares gained 4.21% to Rs 2,878.50 on Monday, compared to the offer price of Rs 3,112-3,176.

On the first day of the FPO, the company received subscriptions for 9.77 lakh shares in the retail investor category, and 3.96 lakh shares in the non-institutional investor category. The qualified institutional buyers (QIBs) category received bids for only 4,576 shares out of the 1.28 crore on offer.

However, most bids from QIBs usually come in on the last day, as institutional investors are typically reluctant to block funds. Ahead of the FPO, the company raised Rs 5,985 crore from anchor investors by allotting 18.3 million shares at Rs 3,276 each to 33 institutional investors.

Adani Group shares faced a decline in the past three trading sessions after US-based activist short-seller Hindenburg Research claimed that the group was engaged in “brazen stock manipulation” and “accounting fraud scheme”. Despite this, Adani Enterprises confirmed that its FPO would continue as planned, with no changes to the offer price.

Adani Group CFO Jugeshinder Singh stated that large, strategic investors do not consider short-term market volatility and therefore, there is no change in their outlook. Adani Enterprises will offer partly paid shares to retail investors at a discount of Rs 64 per share to the issue price. The remaining 50% of the offer price will be paid in one or more subsequent calls, as decided by the board.

Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.

Contact us