Shares of Adani Enterprises remained in focus on Friday after the Adani group’s flagship company kicked off its ₹20,000 crore follow-on public (FPO), the country’s largest-ever secondary share sale, for retail investors amid spat between billionaire Gautam Adani-controlled conglomerate and the U.S.-based short seller Hindenburg Research.
In a report, titled 'Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History', the investment firm has accused Gautam Adani of manipulating stocks and accounting fraud schemes over decades, while Adani Group has refuted the claims and threatened to take legal action against Hindenburg. The research firm in its 106-page report alleged that 7 listed companies are 85% overvalued, which spooked investors’ sentiments and led to a sell-off in the group companies.
Extending fall for the second straight session, Adani Enterprises shares opened 2.65% lower at ₹3,300, against the previous closing price of ₹3,389.85 on the BSE. In the first two hours of trades so far, the stock declined as much as 6.4% to ₹3,173.95, while the market capitalisation slipped to ₹3.63 lakh crore. The stock closed 1.54% lower on Wednesday.
The sell-off in Adani Enterprises shares was in line with other Adani Group companies, which plunged up to 20% in early trade, led by Adani Total Gas and Adani Green Energy. Adani Total Gas was the biggest loser with a 20% fall, followed by Adani Green Energy, which shed 15%. Among others, Adani Transmission tumbled 15%, while Adani Ports and Special Economic Zone, Adani Power, and Adani Wilmar fell up to 6%. On Wednesday, the Adani group companies, the second largest conglomerate in India, wiped ₹85,760 crore in market values, bringing down the total m-cap of 7 listed entities to ₹16.89 lakh crore.
Amid falling shares, market participants kept a close eye on Adani Enterprises’ secondary share sale, which is going to be a litmus test for the company. The ₹20,000 crore offering by Adani Enterprises, which opened for subscription today, will close on January 31. The FPO committee of the board of directors of the company has fixed the floor price for the issue at ₹3,112-3,276 per share. The board also approved a discount of ₹64 per FPO equity share for retail individual investors.
As per the document filed with SEBI, the conglomerate plans to use nearly ₹10,869 crore out of the ₹20,000 crore for funding capital expenditure requirements of its subsidiaries in relation to certain projects of the green hydrogen ecosystem, improvement works of certain existing airport facilities, and construction of greenfield expressway. Besides, it intends to utilise ₹4,165 crore for repayment of certain borrowings of the firm and its three arms - Adani Airport Holdings Ltd, Adani Road Transport Ltd and Mundra Solar Ltd.
As of September 2022, Adani Enterprises had a total debt of around ₹40,000 crore.
Ahead of the FPO, Adani Enterprises on Wednesday raised ₹5984.9 crore from 33 anchor investors, which includes foreign as well as domestic institutional investors. The billionaire Gautam Adani-led company allotted 1,82,68,925 shares to institutional investors at ₹3,276 a share, the upper end of the FPO price band of ₹3,112-₹3,276 a share.
The anchor placement saw participation from marquee foreign investors such as Abu Dhabi Investment Authority (ADIA), Maybank Asia, Goldman Sachs, Nomura Financial, Societe Generale, Jupiter, BNP Paribas, Al Mehwar, Citigroup, and Morgan Stanley. Among domestic players, LIC of India, HDFC Life Insurance Co, SBI Employees Pension Fund, and SBI Life Insurance Co participated in the bid.