Adani Enterprises’ struggling ₹20,000 crore share sale received a surprise boost on Monday, with International Holding Co. (IHC), the investment firm of Abu Dhabi’s ruling family, agreeing to invest $400 million in the company amid a $70 billion rout in Adani group stocks.
In a statement, IHC said it subscribed to 16% of Adani Enterprises’ follow-on public offering (FPO) through its subsidiary, Green Transmission Investment Holding RSC Ltd. The statement came even as several Adani group stocks continued their downward slide for the third straight day.
Including anchor investors and IHC bid, the offer has seen overall demand of ₹9,608 crore as of the second day, against a book size of ₹19,861 crore, leaving a shortfall of ₹10,252.6 crore that needs to be brought in on the final day of the offer.
IHC’s investment arrives at a critical time as Adani tries to reinvigorate the offering after US-based short-seller Hindenburg Research alleged that the group committed accounting fraud and stock manipulation through a maze of shell companies in tax haven jurisdictions.
On Monday, Adani Enterprises’ shares rose 3.93% to ₹2,869.85 on BSE, recouping some of the losses. But the stock is still trading below the FPO price range of between ₹3,112 and ₹3,276. Retail investors will get an additional ₹64 discount per share.
“The IHC bid will boost the Street’s confidence in the FPO. This will cover a substantial part of the institutional book and provide comfort to other institutional investors as well as HNI and retail investors," said an investment banker, speaking on the condition of anonymity.
Data from NSE shows that the retail investor and HNI categories subscribed by 4% each at the end of the second day.
In an interview on Sunday, Adani Group chief financial officer Jugeshinder Singh evinced confidence in the group’s ability to close its share sale successfully, even as he admitted that the Hindenburg episode is likely to dent the participation of retail and HNI investors. “We have the information based on our roadshow. And we are confident about that," he said.
“We believe there will be significantly less participation (retail and HNI). But once you have institutional participation, how retail behaves and how HNIs behave is a different matter. From an FPO point of view, it is not a relevant factor as to which category is investing how much. What matters is that the total FPO gets subscribed," he added.
Ahead of the FPO opening for public subscription, the company had raised ₹5,984.9 crore by selling shares to anchor investors at a price of ₹3,276 apiece, the upper end of the price range.
Adani plans to allocate ₹10,869 crore from the FPO towards capex for its subsidiaries’ green hydrogen projects and existing airports, as well as the construction of a greenfield expressway. Additionally, ₹4,165 crore will be used to repay debt, partially or in full, for Adani Airport Holdings, Adani Road Transport, and Mundra Solar.
This is not the first investment by IHC in Adani Group. Last year, IHC invested $2 billion in three Adani firms: Adani Enterprises, Adani Green and Adani Transmission.
“Our interest in Adani Group is driven by our confidence and belief in the fundamentals of Adani Enterprises; we see a strong potential for growth from a long-term perspective and added value to our shareholders," said Syed Basar Shueb, chief executive officer, IHC.