In the latest offering for investors from the Adani stable, the flagship Adani Enterprises Ltd has filed red herring prospectus with the markets regulator SEBI for the ₹20,000-crore follow-on public offer (FPO), the largest for Indian markets in recent memory, on Wednesday.

In its papers filed with the markets regulator SEBI, AEL mentioned that the offer is being made under fresh issue of equity shares aggregating up to ₹20,000 crore on a partly-paid basis.

The company has fixed the floor price for the FPO equity share at ₹3,112 per share, 13 per cent discount from Wednesday’s closing of ₹3,584.9 on the NSE. The cap price is fixed at ₹3,276 with minimum bid lot size of four shares and in multiples thereof for all categories of investors. The FPO, a fresh issue of equity shares aggregating up to ₹20,000 crore on a partly-paid basis, will be open for subscription from January 27 to January 31. The anchor investors can place bids on January 25.

According to market insiders, the FPO will provide retail investors the opportunity to gain from the recent rally in Adani stocks. The company has offered discount of ₹64 per share for retail individual investors.

The issue has 10 book running lead managers including ICICI Securities, Jefferies India, SBI Capital Markets, Axis Capital, BOB Capital Markets, IDBI Capital Markets JM Financial, IIFL Securities, Monarch Networth and Elara Capital. The Registrar to the offer is Link Intime India.

AEL is the flagship company of the diversified business conglomerate Adani Group having interests in FMCG, Energy, Infrastructure, Green Energy, Airports, Datacentres and Defence .

To fund capex

The company proposes to utilise the net proceeds towards funding capital expenditure requirements and repayment of borrowings. In its objects of the FPO, AEL stated that it will utilise about ₹10,869 crore for funding capital expenditure requirements of some the subsidiaries. These include certain projects of the green hydrogen ecosystem, improvement works of certain existing airport facilities, and construction of greenfield expressway.

The company will also utilise ₹4,165 crore for “repayment, in full or part, of certain borrowings of our company and three of our subsidiaries, namely, Adani Airport Holdings Ltd, Adani Road Transport Ltd, and Mundra Solar Ltd,” it said in its filing.

To sell 3.5% stake

The AEL board in November 2022 had approved fund raising plans of up to ₹20,000 crore through an FPO. The company plans to dilute 3.5 per cent stake through the FPO. Currently, the promoter group holds 72.63 per cent stake in the company, institutions 20.92 per cent and non-institutional holding is at 6.45 per cent.

The FPO will help Adani Group to execute its ambitious projects fast with savings on the cost of interest on borrowings. Market insiders believe that the company’s decision to bring the FPO prior to the Union Budget announcement is also a strategic move to cash in on the market sentiment and provide an opportunity to retail investors to join the Adani juggernaut.

Notably, Adani Enterprises shares outperformed the benchmark indices as the stock almost doubled from ₹1,828 in January 2022 to ₹3,584.9 on Wednesday. Sensex, on the other hand, witnessed much volatility during the past one year and remained steady at 61,045 on Wednesday — almost the same level as in January 2022. Nifty 50, too, stayed flat after a year from 17,617 levels in January 2022 to 18,165 on Wednesday.

In last year, Adani Enterprises outperformed the benchmark indices as the stock almost doubled from Rs 1828 in January 2022 to Rs 3584.9 on Wednesday. Nifty 50 index on the other hand witnessed much volatility during the year but stayed flat after a year from 17,617 levels in January 2022 to 18,165 on Wednesday.

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