Adani Enterprises FPO garners 3% on Day-2; IHC throws Rs 3,200-cr lifeline

IHC money to come in on final day; Maybank Securities has subscribed for shares worth Rs 2,040 crore as anchor, LIC has submitted bids worth Rs 300 crore

The follow-on public offering (FPO) of Adani Enterprises (AEL) was subscribed only 3 per cent on Monday. The issue, which closes on Tuesday, will require bids of more than Rs 13,000 crore to garner the full subscription.

The Gautam Adani flagship firm, however, will be buoyed by Abu Dhabi-based International Holding Company’s (IHC’s) decision to invest $400 million (Rs 3,260.8 crore at the current exchange rate of Rs 81.52 to the US dollar) in the share sale. The investment — about 16 per cent of the issue size — will be made on the final day.

So far, the offering has garnered bids worth only Rs 450 crore. In addition, AEL has received commitments for Rs 5,985 crore from anchor investors. Maybank Securities has subscribed to shares worth Rs 2,040 crore in the anchor category, while state-owned Life Insurance Corporation of India has submitted bids worth Rs 300 crore. The announcement by IHC comes at a time when AEL’s share price continues to languish below its FPO price.

Shares of the company ended at Rs 2,761, up 3.9 per cent over its previous day’s close. The stock had risen as much as 10 per cent in intraday trade to Rs 3,038. AEL’s last closing price is between 7.8 per cent and 12.5 per cent below its price band of Rs 3,112-3,276 per share. 

Syed Basar Shueb, chief executive officer, IHC, said the decision to invest in the FPO “is driven by our confidence and belief in the fundamentals” of the company.

“We see strong potential for growth from a long-term perspective,” he added.

Last year, IHC — a company led by Tahnoun bin Zayed Al Nahyan, the United Arab Emirates national security advisor and brother to the President — had invested almost $2 billion in Adani Group companies.

Even after factoring in investments by anchor investors, IHC and subscriptions garnered so far, AEL will require more than Rs 9,000 crore worth of bids from other investors on Tuesday. It remains to be seen if the company attracts more investors if the secondary market price remains below its FPO price range. 

Since the firm is issuing partly paid-up shares, those participating in the FPO will have to pay 50 per cent now and the balance in one or more tranches to be dec­id­ed by the company over an 18-month period.

The company and investment bankers are confident that the FPO will manage to scrape through. If the issue fails to reach the 90-per cent subscription mark, AEL will have the option to lower the price band and extend the issue date by three days.