Adani’s bid of $2.5 billion emerges from the equity crisis with the backing of investors

MUMBAI (Reuters) – Gautam Adani’s $2.5 billion share sale was fully oversubscribed on Tuesday as investors poured money into his flagship Adani Enterprises despite a scathing short report hitting shares of the Indian billionaire’s conglomerate.

Selling the shares is critical for Adani, not only because it will help reduce debt, but because its success will be seen as a sign of investor confidence as it faces one of its biggest business and reputation challenges in recent times.

Building a record of India’s largest secondary share sale received only 3% of bids on Monday, amid a market crash in Adani shares in recent days. The core portion of the issue was 30% fully subscribed last week.

But on Tuesday, the total share sale was fully subscribed as institutional and foreign corporate investors poured in funds, while participation from retail investors and Adani Enterprises employees remained subdued.

The show closes days after Adani’s public confrontation with Hindenburg Research, which last week cited concerns about the use of tax havens and “significant debt” at the group. She added that shares in seven companies listed in “Adani” witnessed a decline of 85% due to what she called “high valuations.”

This has since resulted in cumulative losses of $65 billion for shares of the Adani Group, which called the report baseless.

Support for the sale of Adani shares came even with the main shares trading at Rs 2,967, up almost 2.5% but below the lower end of the selling price range of Rs 3,112.

The total gross debt of the Adani Group in the fiscal year ending March 31, 2022 increased by 40% to 2.2 trillion rupees ($26.83 billion). Over the past decade, the group has been “constantly letting go,” Adani said on Sunday — while responding to Hindenburg’s allegations.

Hindenburg later said that “Adani’s response largely confirmed our findings and ignored our main questions.”

Al-Adani had said repeatedly in recent days that investors are on his side and the shares will continue to be offered, amid growing fears that may not happen. Reuters reported that bankers at some point considered adjusting the issue prices or extending the sale.

Adani even said the Hindenburg report was a “calculated attack” on India and its institutions while its chief financial officer compared the market rout of its shares to a colonial-era massacre.

Demand from retail investors got bids worth only about 10% of the shares offered for this sector. The data showed that the demand mostly came from foreign institutional investors, as well as from companies bidding over one million rupees each.

Over the weekend and into Monday, Adani’s company was in extensive discussions with investment bankers and institutional investors to attract subscriptions, according to two sources with direct knowledge of the conversations.

Abu Dhabi International Holding Company (IHC.AD) She said she would invest $400 million in the release.

The Hindenburg Report and its aftermath drew worldwide attention. Adani is now the eighth richest person in the world, down from the number three spot on the Forbes rich list last week.

Bring me back the transmission (ADAI.NS) It rose 1.6% on Tuesday, after losing 38% since the Hindenburg report, while the Adani Ports and Special Economic Zone (APSE.NS) jumped 3.2%.

Take me back to Total Gas (ADAG.NS) Weakened at the minimum price by 10%, while Adani Power (ADAN.NS) Willmar condemned me (ADAW.NS) They both fell by 5%.

Global index publisher FTSE Russell said on Tuesday that it continues to monitor publicly available information on the group, particularly from Indian regulatory authorities.

Hindenburg said in its report that it downgraded US bonds and derivatives traded outside India for Adani Group. US dollar-denominated bonds issued by Adani Ports and Special Economic Zone, on Tuesday, continued their decline in the second week.

(Report) by M. Sriram and Chris Thomas; Editing by Aditya Kalra, Muralikumar Anantharaman and Alexander Smith

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