Adani confident of success of FPO, SEBI, other regulatory bodies are investigating the sale
The conglomerate of Asia’s richest tycoon Gautam Adani on Sunday expressed confidence that a Rs 20,000-crore follow-on stake sale of its flagship firm will take place despite the group’s shares falling after the US-based Hindenburg report.
Group CFO Jugshindar Singh said that due to the temporary volatility in the market, there will be no change in the offering price or timeframe. Because Adani Enterprises Limited’s Follow-on Public Offer (FPO) is the best medium for strategic institutional investors. The conglomerate is spread across various sectors like Airports, Mining, Roads, New Energy and Data Centers..which has immense potential for rapid business growth.
Shares of all seven Adani group companies fell sharply in the last two trading sessions following the Hindenburg Research allegations, wiping out investors worth Rs 10.7 lakh crore.
A report by Hindenburg Research has accused the Adani group of open stock manipulation and fraud. After this report came out, the shares of the listed companies of Adani Group related to various businesses have declined.
Singh, in an interview to PTI-Bhasha, said that the group will release a comprehensive response to the Hindenburg report along with documentary evidence.
He said, “It will be made clear that no research was done and there was no investigative reporting. This is not just a lie but a baseless misrepresentation of facts.”
He claimed that Hindenburg had deliberately spread falsehoods, taking only incomplete parts of what had previously been clarified by Samoob. Singh said “they have deliberately misled”.
He expressed confidence that AEL’s FPO would run on time and be fully subscribed by the end of the offer period on January 31. India’s second largest share sale on Friday was subscribed by just 1 percent on the opening day. As per information available with BSE, against AEL’s offer of 4.55 crore shares, only 4.7 lakh shares were subscribed. AEL fell nearly 20 percent below its secondary sale offer price as all seven listed companies in the group downgraded positions following the Hindenburg report. The company is selling the shares in a price band of Rs 3,112 to Rs 3,276. Its shares closed at Rs 2,762.15 on the BSE on Friday.
He said, “All our stakeholders, including bankers and investors, have full confidence in the FPO. We are confident about the success of FPO. Adani Enterprises raised Rs 5,985 crore from anchor investors on Wednesday. Asked why an investor would take up an FPO when similar shares are available in the open market at lower prices, Singh said AEL has very limited free float and hence retail investors are looking for 50-100 shares. Can buy from the market, a strategic institutional investor will not get the share of shares he needs.
“For an institutional investor who prefers large holdings, that option is not available as there is no free float,” he said. “One of the primary objectives of an FPO is to increase the liquidity and free float of shares,” he added. He further added that long-term strategic institutional investors are not investing in AEL just for the stock value. They are investing in AEL as an incubator. AEL’s value lies in the airport business, the road business it does, the new energy projects it is doing, the data center business and the mining business. All these businesses are doing very well. AEL currently has new businesses such as hydrogen, where the group plans to invest USD 50 billion in the value chain over the next 10 years, including airport operations, mining, data centers and roads and logistics. These businesses are planned to be demerged between 2025 and 2028 after achieving basic investment profile and maturity.
Investors investing in AEL will also get business. They believe that the future is bright. Hence in the short term volatility does not affect airport business value, route business value. FPOs are the best option for investors who want long-term exposure to the value of new energy industries and data centers. The group wants to be one of the least expensive producers of hydrogen.. the fuel of the future with a zero carbon footprint. These government services are also betting big on their airport business with the aim of becoming the largest service base in the country in the coming years.
Adani, 60, started out as a businessman and quickly diversified, expanding an empire centered on ports and coal mining to include airports, data centers and cement, as well as green energy. Now also owning a media company, Singh said the follow-on share sale was aimed at strengthening the shareholder base by bringing in more volume, higher net worth and institutional investors. This will also address liquidity concerns by increasing free float, he said. He said that the company wants to increase the participation of wholesale investors. And that’s why he chose the basics. AEL will use the proceeds for green hydrogen projects, airport facilities and greenfield expressways, besides reducing some of its debt.
Investors on Friday made a huge bid of about 4 lakh shares against their Anat 2.29 crore shares. While Qualified Institutional Buyers (QIB) demanded only 2,656 shares against 1.28 crore shares reserved for them. Non-institutional investors asked for 60,456 shares against the recommendation of 96.16 lakh shares. In the hope that the company will shed light on the Hindenburg Report. Singh said the group has given a comprehensive response in 3 days to a report which allegedly took 2 years to prepare.
Regarding the legal action against the US firm, he said, “We have now discovered one part that this report is false. The other part is with the intention of harming Indian shareholders and professionals. This will be done legally. It will be reviewed and considered
