Adani Enterprises FPO Proceeds “As Per Schedule” Despite Reports Of Extension And Price Reduction.
Adani Enterprises on January 28 said its $2.5 billion or Rs 20,000 crore-follow-on public offer (FPO) will continue “as per schedule”. The clarification came after Reuters reported, citing sources, that bankers on the FPO are considering extending the closing date or lowering the issue price.
In response to the report, an Adani Enterprises spokesperson stated that an extension of the FPO’s timeline or a change in its issue price are not being considered.
The FPO’s formal name is “going as per schedule and the announced price-band”, the spokesperson said, adding, “There is no change in either the schedule or the issue price. All of our stakeholders, including bankers and investors, have complete confidence in the FPO. We are extremely optimistic about the FPO’s success.”
According to sources close to the deal who spoke to Reuters, the bankers are considering extending the closing date beyond January 31.
They also claimed that lowering the price of the FPO is being considered, with one of them claiming that it could be reduced by up to 10%. A decision was expected on January 30, according to the sources.
Adani Enterprises had set a floor price of Rs 3,112 ($38.22) per share and a cap of Rs 3,276, but on the first day of the sale, January 27, the company’s shares closed at Rs 2,761.45 apiece.
Since Hindenburg Research raised concerns about debt levels and the use of tax havens on January 24, seven listed companies of the conglomerate controlled by one of the world’s richest men, Gautam Adani, have lost a combined $48 billion in market value.
The Adani Group has dismissed the report and stated that it is considering legal action against Hindenburg.
The 20% drop in Adani Enterprises shares on January 27 pushed it 11% below the secondary sale’s minimum offer price.
The issue was subscribed around 1% on the first day of retail bidding, raising concerns about its ability to proceed. “Everyone was taken aback. “They were not expecting such a negative reaction,” one of the sources told Reuters.
“”Technically, a price band revision or time extension of a public issue can be accomplished with a newspaper advertisement and issuing an addendum,” said Sumit Agrawal, managing partner at Regstreet Law Advisors and a former officer of the Indian capital markets regulator.
According to Indian stock exchange data, by the end of the first day of the share sale, investors, mostly retail, had bid for approximately 470,160 of the 45.5 million shares on offer.
Jefferies, India’s SBI Capital Markets, and ICICI Securities, among others, are handling the sale. They did not respond immediately to requests for comment.
According to a fourth source, Adani management is also discussing the share sale internally to determine next steps.
The Hindenburg report raised concerns about the Adani Group’s use of entities in tax havens such as Mauritius and the Caribbean islands. It said key listed Adani companies had “substantial debt”, which put the entire group on a “precarious financial footing”.
Reuters Contributions
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