It is the retail investors that remained evasive in joining the Adani juggernaut, thanks to the hammered-down stock price since last week after Hindenburg Research’s negative report that sourced the sentiments around the infrastructure-to-FMCG Group.

On Tuesday, Adani Enterprises Limited (AEL)‘s follow-on public offer (FPO) was fully subscribed amidst massive controversy around the group’s corporate governance and financial management.

Also read: Adani Enterprises FPO subscribed 1.1 times; HNIs, QIBs to the rescue

But it couldn’t garner the desired interest from the retail shareholders. The BSE data till 5.18 pm showed that out of the reserved 2.29 crore shares for the retail individuals category, only 12 per cent shares were bid for.

Analysts tracking the FPO maintained that the cheaper AEL shares available in the open market made it a preferred bet for retail investors than opting for the FPO, which proved costlier by 7-11 per cent. On Tuesday, AEL shares closed at ₹2975 on BSE, down by ₹137 or 4.6 per cent from the lower price bend of the FPO ₹3,112 per share.

Similarly, employee quota also remained undersubscribed at 55 per cent till 5.18 PM.

‘Dull participation’

But does it really matter for Adani to ignore dull retail investor participation?

It has already got onboard Qualified Institutional Buyers (QIB) - primarily the Foreign Institutional Investors (FII) and non-institutional corporate and high-network individuals (HNIs). The QIB portion was oversubscribed by 126 per cent, while the non-institutional investor category was oversubscribed with 332 per cent.

Interestingly, Adani had projected its FPO as an attempt to broad-base its shareholder registry and as a result, have a large number of retail investors understand the Group’s businesses and participate in the growth story.

In a video address marketing the FPO on January 22, Gautam Adani, Chairman, said, “Our intention with the FPO is to expand our share registry with a specific focus on India’s retail investors. The FPO is a validation of our intent to bring in new public equity investors as our shareholders.”

At the time of filing the prospectus for the FPO, AEL had total 267,918 shareholders as on January 13, 2023.

For the record, Reliance Group’s flagship Reliance Industries Limited has a total shareholder base of 33,62,915 as on December 2022, this includes 32.52 lakh as retail investors. RIL chairman Mukesh Ambani with networth of $84.2 billion trails behind Adani who is in 8th position in the Forbes Rich list with a networth of $89.1 billion as on Tuesday.

Also read: Adani to set up an AI lab in Tel Aviv

Even as the market observers term Adani’s latest crush on retail investors as ‘optics’, why would it make a difference for AEL to attract more retail investors?

Retail base

In an interview with businessline prior to the FPO opening, Jugeshinder Singh, Chief Financial Officer, Adani Group, had underlined the “critical importance” of having a strong retail shareholder base.

“We haven’t paid attention to this in the past and we have suffered because of it,” he said, adding that heading into the decade through 2030, the company wouldn’t want to repeat it.

By having a large retail base the Group would be better positioned in the market when it would demerge its incubating businesses such as airports, green hydrogen, road construction, defence, data centers etc.

“It will have an impact on how they are seen in the future. You have a readymade market interest in those assets,” Singh said while explaining the advantages for Adani of a large retail investor base.

Besides increasing the free-float shares in the market, this would also help the group get domestic analysts and brokerage coverage for its stocks.

Related Topics
comment COMMENT NOW