MUMBAI – Indian billionaire Gautam Adani’s US$2.5 billion (S$3.3 billion) share sale inched closer to full subscription on Tuesday as investors pumped in funds after a tumultuous week for his group in which its stocks were pummelled by a scathing short-seller report.
The secondary share sale of flagship Adani Enterprises was subscribed 85 per cent on Tuesday, including the anchor investor portion, Indian stock exchange data showed. The share sale needs at least 90 per cent subscription to go through.
On Monday, the book building process of the country’s largest share sale had received only 3 per cent in bids.
“It looks down to the wire with just a few hours remaining on the last day, but the offering should go through. Institutions seem to be subscribing to capitalise on opportunity to buy in bulk quantities outside the open market,” said Mr Dipan Mehta, founder director of Elixir Equities.
Adani group’s stocks have tumbled after the Jan 24 report from United States-based Hindenburg Research which flagged concerns about high debt levels and the use of tax havens, with cumulative losses now at US$65 billion. Adani has called the report baseless.
Adani Total Gas plunged by the 10 per cent daily limit to lead losses in most of the group’s stocks. Flagship Adani Enterprises rose 2.82 per cent, but remained below the floor price set for its follow-on public offering.
The share sale is critical for Mr Adani, not just because it is India’s largest follow-on offering and will help cut debt, but also because its success will be seen as a stamp of confidence by investors at a time when the tycoon faces one of his biggest business and reputational challenges of recent times.
The group had in recent days repeatedly said investors were standing by its side and the share offering would go through, amid rising concerns that may not happen. Bankers at one point had considered tweaking the pricing of the issue, or extending the sale, Reuters had reported.
The support for Adani’s share sale came even as the flagship’s shares were trading at 3,002 rupees (S$48), up nearly 4 per cent but below the lower end of the share sale price band of 3,112 rupees.
Over the weekend and through Monday, Adani held extensive discussions with investment bankers and institutional investors to attract subscriptions, according to two sources with direct knowledge of the talks.
Demand from retail investors remained muted, garnering bids worth only around 9 per cent of the shares on offer for that segment. On Tuesday, demand came from foreign institutional investors, as well as corporates who bid in excess of one million rupees each, data showed.
Abu Dhabi conglomerate International Holding Company (IHC), which is controlled by a key member of Abu Dhabi’s royal family, has said it will invest US$400 million in the issue.
“The follow-on public offering has to go through to restore investor confidence,” said Mr V. K. Vijayakumar, chief investment strategist at Geojit Financial Services.
The Hindenburg report and its fallout have drawn global attention. Mr Adani has slipped from third place on Forbes’ rich list to eighth.
Global index publisher FTSE Russell said on Tuesday that it continues to monitor publicly available information on the group, in particular from the Indian regulatory authorities.
Hindenburg said in its report that it has shorted US-bonds and non-India traded derivatives of the Adani Group. On Tuesday, US dollar-denominated bonds issued by Adani Ports and Special Economic Zone continued their fall into a second week. REUTERS
