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Adani Enterprises Ltd stood its ground on Saturday saying that its ₹20,000-crore follow-on public offering was on schedule with no changes in the price band, the issue price and was confident of its success.
“All our stakeholders including bankers and investors have full faith in the FPO. We are extremely confident about the success of the FPO,” a statement from Adani Enterprises said, amidst intense speculation that the company may be forced to cut down its issue price.
This came even as the MSCI Global Standard Indexes committee said it was monitoring the evolving situation on the group and was seeking feedback from market participants.
A report by Reuters on Saturday, quoting sources, said that bankers to the issue were considering extending the share sale or cutting the issue price.
The ₹20,000-crore FPO issue is open for subscription between January 27 and to January 31 in the price band of ₹3,112-3,276 per share. At Friday’s close of ₹2,768.50, the stock is trading at a 11-15.5 per cent discount to the price band set for the FPO. The stock has tanked nearly 20 per cent in the last two trading sessions after allegations of irregularities and price manipulation by short seller hedge fund Hindenburg.
MSCI ‘closely monitoring’
Earlier in the day, a fresh twist was added to the unfolding drama when the MSCI Global Standard Indexes committee announced that it was aware of the reports about the Adani Group, was closely monitoring the “publicly available information regarding the situation” and was seeking feedback from market participants on these issues.
“Should there be any changes to the MSCI Indexes, it will be announced to all clients simultaneously. MSCI may communicate further as more information is available,’ a notification on its website said.
Nuvama Alternative & Quantitative Research said that eight Adani Group and associate companies were on the MSCI Standard Index and had a cumulative weightage of 5.75 percent. “As per our assumption of passive tracking, the current cumulative value of these eight names is $3.5 billion” as on Friday.
4 possibilities
The research firm detailed four scenarios that could play out.
In the first scenario, if the price volatility ceased then MSCI would not take any action and the stocks would continue on the index.
In the second scenario, if the volatility continued and the feedback from participants recommended exclusion then MSCI could exclude the stocks.
Third scenario, if MSCI planned to exclude the stocks and some of them were trading in the lower circuit then their exclusion can be postponed until there is enough liquidity in the stocks. As an extreme step specific stocks can also be deleted at ‘zero value’.
In the fourth scenario, MSCI can reduce the weightage of the stocks in the index leading to an outflow.
On January 19, Adani Enterprises management had said in a media briefing that the aim of the FPO was to expand shareholder register and build value. Of the total amount raised, it intends to use close to ₹10,869 crore for capital expenditure, and over ₹4,100 crore to pay down debt.
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