HNIs, institutional investors help Adani FPO sail through
2 min read . Updated: 01 Feb 2023, 01:42 AM IST
PremiumThe market cap of 10 listed Adani stocks fell by ₹2,160 cr on Tuesday after falling ₹5.7 tn over three sessions through Monday
MUMBAI, GAUTAM ADANI : In a huge relief for billionaire Gautam Adani, institutional investors and family offices of high net worth individuals (HNIs) salvaged the ₹20,000 crore follow-on public offering (FPO) of Adani Enterprises Ltd, ensuring the issue was subscribed 1.12 times, up from just 0.03 times the previous day.
However, retail investors and Adani employees remained disinterested, given that shares were available for less in the secondary market.
Apart from anchor investors, who invested ₹6,000 crore last week, qualified institutional buyers (QIBs)—largely foreign institutional investors—and HNI family offices participated big-time for the remaining ₹14,000 crore.
On Monday, Abu Dhabi’s royal family backed International Holding Co. (IHC) said it will invest $400 million in the FPO to subscribe to 16% of the share sale.
Word on the Street was that the Adani Enterprises’ FPO was supported by the family offices of some of the leading industrialists in the country.
However, Mint could not independently confirm the same.
Against the 45.5 million shares on offer, institutional and non-institutional shareholders, retail, and employees bid for a total of 50.9 million shares, enabling the FPO to sail through.
Adani Enterprises shares closed at ₹2,975 on BSE, 3.5% above their previous day’s close but 4.4% below the FPO floor price of ₹3,112.
The share sale was priced in a range of ₹3,112-3,276, with a discount of ₹64 for retail investors.
“Retail and employee interest remained dull because of the fall in prices below the floor, but interest by HNI family offices and FPIs, who bid at a premium to the market price, is likely to ensure some short-covering in the near term," said Rajesh Palviya, vice-president of Axis Securities. “The negative overhang on the stocks will sharply reduce for now."
While QIB and non-institutional investors bid 1.26 times and 3.32 times above their quotas, retail investor subscription stood at 0.12 times, while that of employees was subscribed by a little over half the reserved portion.
Arun Kejriwal, the founder of investment advisory firm KRIS, said that, unlike institutional investors who have a longer-term view and stand by their commitment to invest, even if the price corrected subsequently, retail would apply “only and only if" the price at application was lower than the prevailing market rate.
The success of the FPO eased the selling pressure on group stocks. However, the market cap of 10 listed Adani stocks fell by ₹2,160 crore on Tuesday after falling ₹5.7 trillion over three sessions through Monday.
Adani Green, Adani Transmission, Adani Enterprises, Ambuja Cements, Adani Ports, ACC and NDTV closed 1-4% higher, the only exceptions being Adani Total Gas, Adani Wilmar and Adani Power, which remained frozen at their lower circuits of 10% and 5%.
The recovery in these stocks also eased the pressure on banking stocks such as State Bank of India and ICICI Bank, which caused both benchmark indices—the Sensex and the Nifty—to end marginally in the green after a turbulent session ahead of key events such as the Union budget and Fed policy outcome on Wednesday.
Jugeshinder Singh, Adani Group chief financial officer, a day earlier, said that the offer would proceed without any extension or change in issue price, despite concerns raised about the impact of Hindenburg Research allegations on the FPO’s fate.
The cut-off price of the offer will be declared on Wednesday.
Hindenburg Research alleged price manipulation and accounting fraud by the group, which the latter has termed baseless and unresearched.
The Adani group is examining legal redress based on the advice of its legal team, with Hindenburg daring it to do so.
