MUMBAI, Jan 31 (Reuters) – Gautam Adani’s $2.5bn critical stock sale was fully approved on Tuesday as investors pumped funds into his flagship company despite the $65bn rout caused by the Indian billionaire’s report of short selling.
Critical to fundraising Adananot only because it will help reduce the debt of his group, but also because it is seen by some as a sign of trust at a time when the businessman is facing one of their biggest business and reputation challenges.
Hindenburg Research’s report last week said that offshore tax havens were being used improperly and that Adani had alleged concerns about high debt, which Adani denied, but the subsequent market meltdown led to a dramatic and sudden drop in his wealth and forbes rich list rankings. dropped from third to eighth place. .
India’s largest ever secondary share sale attracted key investors such as Maybank Securities and the Abu Dhabi Investment Authority, as well as India’s HDFC Life Insurance and the state-backed Life Insurance Corporation. (LIFI.NS).
However, 30% of the issuance’s anchor was fully subscribed last week, while bookbuilding only took up 3% of bids on Monday amid concerns about a decline in Adani’s stock.
By Tuesday, the general share sale was fully accepted as foreign institutional investors and institutional funds poured in, despite the participation of individual investors and Adani Enterprises. (ADEL.NS) The number of employees remained low.
“Investors will find the successful completion of the FPO (follow-up IPO) a welcome relief, as this implies that the company still has the support of institutional investors,” said Leonard Law, Senior Credit Analyst at Lucror Analytics Singapore. Tuesday.
“The FPO will help increase Adani Enterprises’ IPO (thereby partially addressing the issue of heavy shareholder ownership) as well as reduce leverage for the company and increase investor sentiment,” Law added.
The proposal expires days after Adani’s public confrontation with Hindenburg Research last week, which cited concerns over the use of tax havens and “significant debt” in the group. He added that shares in seven listed companies in Adani are down 85% due to what they call “very high valuations”.
The Adani group described the report as unfounded, saying it complied with all laws and disclosure requirements, adding that it is considering filing a lawsuit against Hindenburg.
Support for Adani’s share sale came even as the flagship’s shares closed at Rs 2,973.9, up nearly 3% but staying below the lower end of the Rs 3,112 selling price band.
In the fiscal year ending March 31, 2022, Adani Group’s total gross debt rose 40% to 2.2 trillion rupees ($26.83 billion). Adani said on Sunday Response to Hindenburg’s allegations that over the past decade the group has “consistently unlevered”.
Adani said the Hindenburg report was a “calculated attack” on India and its institutions, while her CFO compared the market drop for her shares: and colonial era massacre.
Hindenburg later said that Adani’s “answer largely confirms our findings and ignores our fundamental questions.”
RETAIL, CORPORATE DEMAND
When asked about the Adani-Hindenburg saga, V. Anantha Nageswaran, India’s chief economic adviser, told reporters, “the corporate sector as a whole has reduced its debt and its balance sheets are healthy. So what happens to a particular group of companies is a matter between the market and the group of companies. “
Adani has repeatedly said that he is on the side of investors and that the stock offering will take place. Bankers at one point considered changing the price of the issue or extending the sale, Reuters reported.
Most of the demand in the public ledger gathering process came from non-institutional investors who invested more than Rs 1 million each, and the bids were five times the shares offered. The share of qualified corporate buyers, including foreign investors, became 1.2 times more subscribers.
However, domestic financial institutions or banks and domestic investment funds did not bid. Demand from individual investors and company employees remained muted, collecting offers of 12% and raising 55% of the shares offered to the public.
“The Hindenburg report had a particularly negative impact on the sentiment at the retail level. The purpose of the FPO was twofold – raising funds to reduce debt and expanding shareholding … they were unable to expand shareholding,” said Ambareesh Baliga, an independent market analyst based in Mumbai.
Adani’s firm held extensive talks with investment bankers and institutional investors over the weekend and through Monday to attract subscriptions, according to two sources directly familiar with the talks.
The names of the investors are not yet available, but the Abu Dhabi conglomerate International Holding Company (İHC.AD) He said late Monday he would invest $400 million.
Adana Transmission (ADAI.NS) Adani Ports and Special Economic Zone closed up nearly 4% on Tuesday after losing 38% since the Hindenburg report. (APSE.NS) It rose 2.6%.
Adani Total Gas (ADAG.NS) Adani Power is closing at the lower price limit with 10% decrease. (ADAN.NS) and Adani Wilmar (ADAW.NS) each down 5%.
In its report, Hindenburg said Adani Group is short-selling US bonds and derivatives that are not traded in India. US dollar bonds issued by Adani Ports and Special Economic Zone on Tuesday continued their decline to the second week
Reported by M. Sriram, Chris Thomas, Aditya Kalra, Jayshree Upadhyay, Shivangi Acharya, Anshuman Daga and Bengaluru newsroom; Editing by Muralikumar Anantharaman and Alexander Smith
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