On its last day, the Rs 20,000 crore Adani Enterprises follow-on public offer (FPO) gathered momentum, getting 40 per cent bids by 1 pm, still away from getting fully subscribed. The issue received bids for 1,83,55,956 shares against the total offer size of 4,55,06,791 shares, so far on Day 3. The quota reserved for qualified institutional bidders was subscribed 68 per cent while those of non-institutional investors by 81 per cent. The employee quota attracted 33 per cent bids while the quota reserved for retail investors received 8 per cent bids.
Adani Enterprises is betting big on institutions and strategic investors, as retail bids are expected to remain low, thanks to slipping of the stock price below the FPO price band of Rs 3,112-3,276 per share.
Amid a raft of allegations and counter allegations over Hindenburg report that alleged fraud and stock manipulation at the Adani group, Adani stocks have seen a sharp erosion in values, but shares of Adani Enterprises have been on a recovery mode.
By 1.15 pm, the scrip was trading at Rs 2,982.95, up 3.63 per cent. This is in addition to a 4.2 per cent rise on the counter in the previous session. All eyes on are institutional investors, as the issue is scheduled to close today.
On Monday, Abu Dhabi’s IHC said it will invest $400 million (Rs 3,200 crore) in the Adani Enterprises’ FPO through its subsidiary Green Transmission Investment Holding. IHC said it will subscribe to 16 per cent of Adani Enterprises’ $2.5 billion FPO. Shares of Adani Enterprises gained 5.26 per cent to hit a high of Rs 3,030.
Adani Group CFO Jugeshinder Singh told BT TV that long-term institutional and strategic investors do not see any change in the value of Adani Enterprises after the recent drop, even as retail investors are sensitive to share prices.
He hoped the issue to sail though.
An issue is deemed successful if it receives at least 90 per cent subscription. Analysts said institutional demand can give the Adani group breathing room for adjusting oversubscription against the undersubscriptions in retail and non-institutional investor categories.
Adani Enterprises’ FPO committee is scheduled to meet on February 1 for the approval of offer price and prospectus in relation to the offer.
Adani Enterprises in a filing to BSE said in the event of offer price being lower than anchor investor allocation price, the difference will not be funded to anchor investors.
“The maximum period for which an FPO can be kept open is 10 working days. But, availing this option can lead to more damage at this stage instead of protecting the shareholder value. One alternative that the Adani group can look at is that the offer can be underwritten to the extent of shortfall in the subscription, which will ensure that the FPO sails through. However, there are conditions imposed by Sebi for underwriting an FPO through book building process,” Sameer Raina, Principal Associate at Pioneer Legal said.
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