Adani Enterprises FPO: Discount share sale attempts to woo retail investors

to entice mom-and-pop investors to buy into the flagship of his port-to-power empire, Adani Enterprises Ltd. will sell the new shares at a discount and allow payment in three tranches when it launches a $2.5 billion follow-on offer later this month — an unprecedented move for one of the country’s most popular stocks. For a stock that is up more than 1,400% since the start of 2020, sweetness is key to wooing retail investors.

The nation’s largest follow-on share sale serves several goals. A diverse shareholder base lends greater credibility to the stock market and strengthens Adani’s legacy as a wealth creator for millions of investors, not just itself. A larger group of shareholders can trigger more analyst coverage — only two brokerages track it — of a thinly traded stock. And using a quarter of the income to pay off debt would offset some criticism of the empire’s high leverage.

“The story of Adani is the story of India. “Our chairman wants every Indian to be able to invest in our shares,” Jugeshinder Singh, chief financial officer of Adani Enterprises, told reporters on Thursday. it.”

That level of retail investment is a key metric the tycoon must improve in order to stand shoulder to shoulder with other local billionaires.

Domestic mutual funds owned only 1.27% in Adani Enterprises for the quarter ended September – the latest period for which data is available with stock exchanges – while the total public shareholding stood at 27.37%. As against 5.52% shareholding by local mutual funds in Reliance Industries Limited, India’s largest company by market value Mukesh Ambani, The non-founders owned 49.43% in Reliance at the end of September.

diamond merchant

Adani, which started as a diamond trader in Mumbai in the 1980s, now operates a conglomerate spread across ports, airports, coal mines, power plants. After a wild diversification spree, it is now also powerful in cement, realty and media, with ambitious plans in green energy.

Adani Enterprises is also the incubator of the group’s new businesses, many of which are expanding rapidly and will be ready for public listing between 2026 and 2029, according to CFO Singh.

Adani has consistently aligned its corporate strategy with the policy initiatives of the Government of India led by Prime Minister Narendra Modi.

The billionaire is now seeking to strengthen his corporate image as his businesses go global and attract foreign investors including TotalEnergies SE and Warburg Pincus.

According to Kranti Bathini, chief market strategist at Wealthmills Securities in Mumbai, the Adani Enterprises mega share sale will address concerns of limited free float and dominance of some foreign portfolio investors.

“There are very few domestic institutional investors and retail investors in Adani shares,” Bathini said. “It will also help in providing stability to the stock prices and provide convenience for new investors.”

Adani’s flagship firm’s inclusion in the NSE Nifty 50 index in September – the most closely tracked stock gauge in the country – forced passive funds to buy the stock.

The stock was trading at a valuation of more than 141 times its one-year forward earnings, according to data compiled by Bloomberg, while Reliance traded at nearly 20 times as of last week.

The tycoon is hoping that the share sale, which will open for anchor investors on January 25 and others on January 27-31, will attract a high level of public interest with discounts and installment plans on offer.

“The idea is to garner mass support. They want to expand the shareholder base,” said Arun Kejriwal, founder of KRIS, a Mumbai-based investment advisory firm. It helps boost the company’s image.

The text of this story is published from a wire agency feed without any modification. Only the headline has been changed.