India’s Adani rides out storm as investors rally to $2.5 bln share sale

  • Adani’s script is back with commercial success
  • The landmark $2.5 billion share sale is fully subscribed
  • The report by short sellers led to a fall in Adani’s shares

MUMBAI, Jan 31 (Reuters) – Gautam Adani’s $2.5 billion retail business registered a full record on Tuesday as investors poured money into his flagship company, despite a loss of the $ 65 billion in the Indian billionaire’s stock was generated by the short seller’s report.

The fundraiser is important for Adani, not only because it will help reduce its group’s debt, but also because some see it as an award for it’s time for the tycoon to face one of his biggest business and reputation challenges.

A report by Hindenburg Research last week cited abuse of offshore tax havens and concerns about high debt, which Adani denied, but the subsequent market collapse ‘which led to a sudden and sudden fall in his fortune when he dropped to eighth from third place on the Forbes rich list. .

India’s second largest share sale attracted participation from anchor investors including Maybank Securities and Abu Dhabi Investment Authority, as well as HDFC Life Insurance and Life Insurance Corporation of India ( LIFI.NS ).

But while the 30% anchor portion of the issue was fully subscribed last week, the bookmaker had only 3% of the bids on Monday, amid concerns about the loss of Adani’s stock.

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On Tuesday, share sales were largely registered as foreign institutional investors and corporate funds flooded in, although participation by retail investors and employees remained low. Adani Enterprises (ADEL.NS).

“Investors will see the completion of the FPO (subsequent public offering) as a welcome relief, as it means the company still has investor support,” said Leonard Law, Senior Credit Analyst at Lucror. Analytics Singapore. Tuesday.

“The FPO will help expand Adani Enterprises’ public offering (partially addressing promoter-focused autonomy issues), as well as reduce investment for companies and improve investor sentiment,” Law said.

The offer was closed days after Adani publicly met with Hindenburg Research, which last week raised concerns about the use of the shelter space and the group’s “heavy debt”. He added that shares of Adani’s seven listed companies were at an 85% discount to what he called “high valuations”.

The Adani group said it complies with all laws and disclosure requirements, calling the report baseless and adding that it is considering taking action against Hindenburg.

Support for the sell-off in Adani’s shares came even as the flagship’s shares closed at 2,973.9 rupees, up nearly 3% but below the bottom of the trading range. 3,112 rupees.

Adani Group’s total debt for the financial year ending March 31, 2022, rose 40% to 2.2 trillion rupees ($26.83 billion). Adani said on Sunday in response to Hindenburg’s accusations that over the past decade the group had been in “consistent decline”.

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Adani said the Hindenburg report was a “calculated attack” on India and its institutions, while its CFO compared the stock market crash to a colonial-era massacre. – money.

Hindenburg later said that “Adani’s response reinforced our findings and ignored fundamental questions.”

Reuters Graphics


Asked about the Adani-Hindenburg saga, V. Anantha Nageswaran, India’s economic adviser, told reporters that “the corporate sector as a whole has shrunk and their balance sheets are healthy. and the corporate group.”

In the past few days, Adani has repeatedly said that the investors are standing by it and that the offer will go ahead. The bank at one point thought to change the price of the issue, or to extend the sale, according to Reuters.

Most of the demand during the public book building came from non-institutional investors who invested more than 1 million rupees each, with a total of Rs. total number of shares offered. The share for qualified institutional buyers, which includes foreign investors, was registered 1.2 times.

But financial institutions or banks, as well as internal funds, did not bid. And the demand of retail investors and company employees is still quiet, receiving offers of 12% and 55% of the offered shares.

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“The Hindenburg report damaged the sentiment especially in the commercial sector. The purpose of the FPO was twofold – to collect money to reduce the debt and to spread the deposits…deposits,” he said. Ambareesh Baliga, an independent market analyst in Mumbai.

Adani held extensive discussions over the weekend and into Monday with investment banks and institutional investors to attract bookings, according to two sources with direct knowledge of the matter. the conversation.

The investors have not yet been named, but Abu Dhabi Conglomerate International Holding Company (IHC.AD) said on Monday it would invest $400 million.

Adani Transmission (ADAI.NS) closed nearly 4% higher on Tuesday after losing 38% since the Hindenburg report, while Adani Ports and Special Economic Zones (APSE.NS) rose 2.6% ).

Adani Total Gas ( ADAG.NS ) closed 10% off its lowest, while Adani Power ( ADAN.NS ) and Adani Wilmar ( ADAW.NS ) fell 5%.

Reuters Graphics

Hindenburg said in his report that he had canceled US bonds and non-Indian derivatives of the Adani group. On Tuesday, US dollar bonds issued by Adani Ports and special economic zones continued to fall for a second week.

Reporting by M. Sriram, Chris Thomas, Aditya Kalra, Jayshree Upadhyay, Shivangi Acharya, Anshuman Daga and Bengaluru newsroom; Edited by Muralikumar Anantharaman and Alexander Smith

Our Standards: The Thomson Reuters Trust Principles.


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