Adani Enterprises' Rs 20,000-crore FPO sails through Hindenburg storm

Even though AEL's share price continued to languish below its issue price, FPO managed to garner 1.12 times subscription, attracting bids worth over Rs 16,000 cr

The Adani group on Tuesday pulled off the Rs 20,000-crore follow-on public offering (FPO) for its flagship company, Adani Enterprises (AEL), despite the storm created by US short seller and investment research firm Hindenburg Research through a barrage of allegations against the conglomerate.

Even though AEL’s share price continued to languish below its issue price, the FPO managed to garner 1.12 times subscription, attracting bids worth over Rs 16,000 crore. Over 60 per cent of these bids came from high networth individuals (HNIs). The quota reserved for HNIs was subscribed 3.3 times.

According to market sources, several ultra-rich individuals of the country invested in the FPO through their family offices.

The three-day FPO, however, didn’t see a single bid from domestic financial institutions and mutual funds (MFs). MFs also didn’t participate in the anchor book.

The institutional investor portion garnered 1.26 times subscription with bids worth Rs 5,276 crore. Abu Dhabi-based International Holding Company (IHC) had committed to investing about Rs 3,200 crore in the issue. The retail portion was subscribed just 12 per cent, and saw bids to the tune of Rs 900 crore.

Ahead of the FPO, AEL had allotted shares worth Rs 5,985 crore to anchor investors at Rs 3,276 a share. In the anchor book, Maybank Securities subscribed to shares worth Rs 2,040 crore, while state-owned LIC applied for Rs 300 crore worth of shares.

Shares of AEL closed at Rs 2,975 on Tuesday, up 3.4 per cent over the previous day’s close. The price band for the FPO was Rs 3,112-3,276 a share — 4.4-9.2 per cent higher than the last close. Retail investors were offered a discount of Rs 74 per share on the soon-to-be-finalised issue price.

In the past four trading sessions, the company has shed 13.6 per cent.

Market players said AEL garnering full subscription despite the tumult following the Hindenburg report was a remarkable feat. On the penultimate day, the issue was subscribed just 3 per cent, stoking buzz that AEL may lower its price band and extend the issue date.

Besides the Rs 20,000-crore fundraise, AEL’s FPO was set to diversify its shareholder base. However, this goal may not have been fully achieved as many retail investors and MFs abstained from participating amid a rout in Adani group stocks.