Adani’s crucial share sale 85% subscribed as institutions pump in funds

MUMBAI, Jan 31 (Reuters) – Indian billionaire Gautam Adani’s $2.5 billion share sale neared full subscription on Tuesday as investors cashed in after a tumultuous week for his group in which its shares were hit by scathing reports of short sellers.

A secondary share sale of flagship company Adani Enterprises ( ADEL.NS ) was 85% subscribed on Tuesday, including the share of major investors, Indian stock exchange data showed. Stock sales require at least 90% subscription to go through.

By Monday, the book-building process for the nation’s largest share sale had received only 3% in bids.

Adani group shares have fallen after a Jan. 24 report from US-based Hindenburg Research raised concerns about high debt levels and the use of tax shelters, with accumulated losses now standing at $65 billion. Adani has called the report baseless.

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The share sale is important for Adani, not only because it is India’s biggest follow-on offering and will help reduce debt, but also because its success will be seen as a sign of confidence by investors at a time when the tycoon faces one of its biggest. business and reputational challenges in recent times.

Reuters graphic

The group in recent days has repeatedly said investors stand by it and that the share offer will go ahead, amid growing concerns it may not happen. Bankers at one point had considered changing the price of the issue, or extending the sale, Reuters reported.

Support for Adani’s share sale came even as the flagship was trading at 3,002 rupees, up nearly 4% but below the floor of the stock’s sale price of 3,112 rupees.

“It’s looking down with just a few hours left in the last day, but the bidding should continue. Institutions seem to be subscribing to take advantage of the opportunity to buy in bulk outside the open market,” said Dipan Mehta, founding director of Elixir Equities.

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Over the weekend and into Monday, Adani’s firm held extensive discussions with investment bankers and institutional investors to attract subscriptions, according to two sources with direct knowledge of the discussions.

Demand from retail investors remained muted, garnering bids worth only around 9% of the shares on offer for the segment. On Tuesday, demand came from foreign institutional investors, as well as corporates bidding above 1 million rupees each, the data showed.

Abu Dhabi conglomerate International Holdings ( IHC.AD ) said it would invest $400 million in the issue.

“Follow-on public offerings need to go through to restore investor confidence,” said VK Vijayakumar, Head of Investment Strategist at Geojit Financial Services.

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The Hindenburg Report and its aftermath have attracted global attention. Adani is now the eighth richest person in the world, down from third place on the Forbes rich list last week.

Global index publisher FTSE Russell said on Tuesday it was continuing to monitor publicly available information about the group, particularly from Indian regulatory authorities.

Hindenburg said in its report it had shorted US bonds and non-Indian trading derivatives for the Adani Group. On Tuesday, US dollar-denominated bonds issued by Adani Ports and Special Economic Zones continued their fall for a second week.

Report by M. Sriram and Chris Thomas; Editing by Aditya Kalra and Muralikumar Anantharaman

Our Standards: Thomson Reuters Trust Principles.


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