Abu Dhabi’s IHC to invest $400 mn in Adani Enterprises FPO

Abu Dhabi's diversified group International Holding Company (IHC) has said it will invest $400 million in Adani Enterprises' ongoing follow-on public offer (FPO) worth ₹20,000 crore, which kicked off on Friday last week.

The investment, which will be the first by IHC in the year 2023, will be done via its subsidiary Green Transmission Investment Holding RSC Ltd, the company said.

The current investment by IHC comes amid a tepid response for the Adani Enterprises FPO so far. Investors also continue to shed the group company stocks since the release of an adverse report by US-based short seller Hindenburg Research last week. This has led to a collective market cap loss of ₹5.56 lakh crore so far.

Adani Enterprises’ FPO was subscribed just 1% by Friday and 3% by Monday, with the company receiving bids for 13,98,516 shares against the issue size of 4,55,06,791 shares.

Ironically, the loss in the market cap so far is over 28 times the planned FPO, which was touted to be the largest-ever FPO in the Indian capital markets history.

IHC has said its interest in Adani Group is driven by its confidence and belief in the fundamentals of Adani Enterprises. "We see a strong potential for growth from a long-term perspective and added value to our shareholders," said Syed Basar Shueb, Chief Executive Officer, IHC.

Also, it's the second investment deal IHC has completed with Adani group after last year's $2 billion investment in three green-focused publically listed companies -- Adani Green Energy, Adani Transmission, and Adani Enterprises.

"The advantage of the FPO is the historical reference for the company's earnings report, company's management, business practices, and much data to bank on before making any investment decision," Shueb said.

Shueb said IHC is watching the international market closely for new prospects and will continue exploring further opportunities outside its traditional market in 2023. It is also aiming to increase its global acquisition by 70% in 2023, with the clean energy and food processing sectors being a key focus.

Ahead of the FPO, Adani Enterprises had last week raised ₹5,984.9 crore from 33 anchor investors, which include foreign as well as domestic institutional investors. The Gautam Adani-led company allotted 1,82,68,925 shares to institutional investors at ₹3,276 a share, the upper end of the FPO price band.

The anchor placement saw participation from marquee foreign investors such as Abu Dhabi Investment Authority (ADIA), Maybank Asia, Goldman Sachs, Nomura Financial, Societe Generale, Jupiter, BNP Paribas, Al Mehwar, Citigroup, and Morgan Stanley. Among domestic players, LIC of India, HDFC Life Insurance Co, SBI Employees Pension Fund, and SBI Life Insurance Co participated in the bid.

Meanwhile, the shares of Adani Enterprises jumped as much as 9% but closed 3.93% up on Monday after the ports-to-power conglomerate issued a 413-page reply to Hindenburg Research. The Adani Enterprises stock closed at ₹2,869.85 apiece on the National Stock Exchange (NSE) on Monday, staying below the FPO price band of ₹3,112-3,276 per share. However, the selloff in other Adani Group stocks continued on Monday, with Adani Transmission, Adani Total Gas and Adani Green Energy closing down 15.23%, 20.00%, and 20%, respectively.