Adani weathers the storm as investors rush behind a $2.5 billion stock sale

MUMBAI (Reuters) – Gautam Adani’s $2.5 billion IPO came out fully on Tuesday as investors poured cash into his parent company Adani Enterprises, despite a scathing short-selling report that hit the Indian billionaire’s shares.

Selling the shares is critical to Adani, not only because it will help reduce his group’s debt, but also because its success will be seen as a sign of investor confidence as he faces one of his biggest business and reputational challenges.

Although the underlying 30% of the issue was fully subscribed last week, the record-building process for India’s largest secondary share sale was only 3% in Monday’s bids, amid fears it may struggle due to the collapse in shares. Adani.

But on Tuesday, the share sale was completely oversubscribed as institutional investors and foreign companies poured in money, although retail investors and Adani projects also participated. (ADEL.NS) Staffing remained low.

“The successful completion of the FPO (next public offering) will be seen by investors as a welcome relief, as it means the company still has the support of institutional investors,” said Leonard Law, senior credit analyst at Lucror Analytics Singapore. Tuesday.

“The FPO will help extend Adani Enterprises’ public flotation (thereby partially addressing the issue around concentrated promoter contribution), as well as reduce the company’s leverage and improve investor sentiment,” Lu added.

The show closes days after Adani’s public confrontation with Hindenburg Research, which last week cited concerns about the use of tax havens and “significant debt” at the group. She added that shares in seven companies listed in “Adani” witnessed a decline of 85% due to what she called “high valuations.”

This caused cumulative losses of $65 billion for the shares of the Adani Group, which called the report unfounded.

Support for the sale of Adani shares came even as the principal shares closed at Rs 2,973.9, up nearly 3% but below the lower end of the selling price range of Rs 3,112.

The total gross debt of the Adani Group in the fiscal year ending March 31, 2022 increased by 40% to 2.2 trillion rupees ($26.83 billion). On Sunday, responding to Hindenburg’s allegations, Adani said the group had “consistently let go” over the past decade.

Adani even said the Hindenburg report was a “calculated attack” on India and its institutions while its chief financial officer compared the market rout of its shares to a colonial-era massacre.

Hindenburg later said that “Adani’s response largely confirmed our findings and ignored our main questions”.

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Al-Adani has said repeatedly in recent days that investors are on his side and the shares will be offered. Reuters reported that bankers at some point considered adjusting the issue prices or extending the sale.

Demand from retail investors got bids worth only about 10% of the shares offered for this sector. The data showed that the demand mostly came from foreign institutional investors, as well as from companies bidding over one million rupees each.

Over the weekend and into Monday, Adani’s company was in extensive discussions with investment bankers and institutional investors to attract subscriptions, according to two sources with direct knowledge of the conversations.

Abu Dhabi International Holding Company (IHC.AD) She said she would invest $400 million in the release.

The Hindenburg Report and its aftermath drew worldwide attention. Adani is now the eighth richest person in the world, down from the number three spot on the Forbes rich list last week.

Bring me back the transmission (ADAI.NS) It closed nearly 4% higher on Tuesday after losing 38% since the Hindenburg report, while the Adani Ports and Special Economic Zone (APSE.NS) jumped 2.6%.

Take me back to Total Gas (ADAG.NS) It closed down 10% at the lower end of the price, while Adani Power closed (ADAN.NS) Willmar condemned me (ADAW.NS) They both fell by 5%.

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Global index publisher FTSE Russell said on Tuesday that it continues to monitor publicly available information on the group, particularly from Indian regulatory authorities.

Hindenburg said in its report that it downgraded US bonds and derivatives traded outside India for Adani Group. US dollar-denominated bonds issued by Adani Ports and Special Economic Zone, on Tuesday, continued their decline in the second week.

Reporting by M. Sriram, Chris Thomas, Aditya Kalra, Jeshree Upadhyay, Anshuman Daga, Bengaluru Editing Room, Muralikumar Anantharaman, Alexander Smith

Our standards: Thomson Reuters Trust Principles.

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