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Adani Enterprises Ltd, the flagship of the diversified Adani group, is exploring ways to garner maximum participation from retail investors and high-net worth individuals for its proposed 20,000-crore follow-on public offer, which will be India’s largest so far.

“The FPO aims to maximize retail and HNI categories as they are inter-generational investors unlike mutual funds or domestic institutional investors, who have a much shorter horizon for investments," said Jugeshinder Singh, chief financial officer, Adani group. “There are some large family offices that can participate as institutions also, so they don’t have to participate as HNI. If they participate as institutions, that gives us more space for HNIs and regular investors, and allows us to have greater HNI and retail participation," he said when asked about interest evinced by institutional firms, given the meteoric rise in valuations of Adani Enterprises in the past few years.

“Having a core infra portfolio, these companies will be massively valuable, but their value accrues over a period of time. If you see Adani Transmission, the value accrued over a nine-year period; we started in 2012. Adani Green, we started incubating in 2011, and the value is now emerging. So we need those kinds of investors," he added.

To draw retail investors, Adani Enterprises will offer an added discount of 64 per partly paid-up share from the cut-off price. The price range for the FPO, running through 27- 31 January, has been fixed at 3,112-3,276.

Mutual funds, he said, had monetized less than 2% of Indian household wealth, allowing the group to potentially access a vast swathe of savings. It has been engaged in domestic investor outreach for the last three years, he said.

“We have been running roadshows to reach domestic investors across cities: Delhi, Kolkata and Surat for five years, and next month, we will hit Rajkot to increase their count as shareholders across our group verticals. Our aim is to have 10 million retail investors. I am told by some investors that at the roadshows, they are seeing huge interactions between corporate and domestic investors, decades after what Dhirubhai Ambani would do on outreach programmes for domestic investors."

On steep valuations of group companies becoming a roadblock for potential retail investors, Singh said: “High equity valuations imply that people value our growth and this reduces our risk premium, which in turn will boost the value of our utility business."

“We feel across infra like airports, for one, we can reduce tariffs and compete with the best like in Sydney," he added.

After the 20,000-crore proposed FPO, retail investors’ holding in Adani Enterprises will increase from around 1.4% to over 3%, while promoter shareholding will drop by 3.6 percentage points.

Adani Enterprises’ shares have soared 174% from their 52-week lows in less than 10 months to 4189.55 on 21 December. The stock has since corrected to 3,456 apiece on 20 January.

On why brokerages avoid including Adani group companies in their coverage universe, Singh said utility businesses are not tracked widely by analysts. But, this would change with time, he added.

The follow-on public offer will see the group invest 10,869 crore for capital expenditure requirements of the company’s subsidiaries in the green hydrogen ecosystem projects, existing airports and for construction of a greenfield expressway, while 4,165 crore will be used to repay debt either partly or fully as well as for three subsidiaries—Adani Airport Holdings Ltd, Adani Road Transport Ltd, and Mundra Solar Ltd. The rest will be used for general corporate purposes, according to the offer document.

The group is also confident that its green hydrogen business will be operational in four years. “We are confident that by 2026, hydrogen will be at an operating cost of 25-30 cents. Depending on the rate of return requirement, we will sell it for between $1.80 and 2.30 a kg, which is lower than India’s LNG import cost. So, already it will compete without any government subsidy," said Singh.

The group has invested $1.6 billion in the hydrogen ecosystem and has signed a memorandum of understanding with French energy major Total. It will be investing 25% equity in the business, he said.

The Adani group is also looking at various partnerships for the airport business, he added.

“We have entered a joint venture in the duty-free area. In airports, you have specific elements that address a specific consumer base, and we are looking at other JVs in fuel services and public entertainment space, among others," Singh said.

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