Adani Enterprises fixes follow-on offer band at discount of up to 13%

The company has fixed a price band of for 3,112-3,276 20,000 crore FPO.

Adani Enterprises shares closed 3,584.90 on Wednesday, down 1.5% from their previous close. Adani Enterprises said in a stock exchange filing that the bidders will have to initially pay 50% of the offer price and the balance amount in one or more instalments.

Shares will be allotted to anchor investors on January 25 and the rest of the offer will be open from January 27 to 31.

FPO will increase the free float of the company. Promoters hold 72.63% of the equity capital of the company, while the public holds 27.37% shareholding for the quarter ending September 2022. Post the offer, the promoter shareholding will decline by around 5% based on Wednesday’s market cap 4.1 trillion.

Partly paid shares of the company under FPO reminiscent of Reliance Industries Limited 53,000-crore-plus rights issue in 2021, payable in three tranches over 18 months.

of Rs 20,000 crore being raised through the offer Rs 10,869 crore will go into capital expenditure for its green hydrogen subsidiaries, existing airport facilities and construction of greenfield expressways.

Rs 4,165 crore will be used to partly or fully repay the debt of the company and its three subsidiaries – Adani Airport Holdings Ltd, Adani Road Transport Ltd and Mundra Solar Ltd and the rest for general corporate purposes.

In September, billionaire Gautam Adani said his group would invest $100 billion over the next decade, primarily in energy transition and digital opportunities, as well as sectors such as aerospace and defence, metals and petrochemicals. Of this, 70% is assigned to the energy transition space.

“We have a commitment to invest $70 billion in an integrated hydrogen-based value chain,” Adani said.

Adani Enterprises’ revenue from operations triples 79,019 crores, and profit nearly doubled 901 crore in the first half of FY23 from the year-ago period.

“Given that it is a large-cap index stock, the pricing is very attractive,” said a person advising the company on the follow-on public offer.

Adani Enterprises entered the benchmark Nifty 50 index in September 2022.

Sudip Bandyopadhyay, chairman, Inditrade Capital, said, “It is a good initiative as the FPO will raise capital and free float the company.”

However, a senior executive at a domestic institution said the company would have to show “explosive” growth to justify the valuation, which would be around 300 P/E adjusted for discounts.

Investment Bank ICICI Securities Ltd. Jefferies India Pvt. Ltd., SBI Capital Markets Ltd., Axis Capital Ltd., BOB Capital Markets Ltd., IDBI Capital Markets & Securities Ltd., JM Financial Ltd., IIFL Securities Ltd., Monarch Networth Capital Ltd. and Elara Capital (India) Pvt. Ltd. is managing the share sale.