Shares of billionaire Gautam Adani-controlled Adani group companies extended their fall for the fourth straight session on Tuesday as the conglomerate’s 413-page response to Hindenburg’s allegation failed to soothe investors’ nerves. Adani group has lost ₹5.56 lakh crore in market values after Hindenburg Research last week released a report, alleging that key listed Adani firms have taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing.
The report comes amid the Adani group's plans to launch the country’s largest-ever FPO of ₹20,000 crore, which opened on January 27 and close on January 31. The company has fixed the floor price for the issue at ₹3,112-3,276 per share. The board also approved a discount of ₹64 per FPO equity share for retail individual investors.
Continuing its losing streak, shares of Adani Green Energy, Adani Transmission, Adani Power and Adani Wilmar fell between 5% and 10% in opening trade on Tuesday. Adani Total Gas also hit 10% lower circuit limit.
Bucking the trend, Adani Enterprises, Adani Port, and recently acquired cement entities, ACC and Ambuja Cement were trading higher. Adani Port & SEZ rose nearly 2% in opening deals, while ACC and Ambuja Cement gained up to 4%.
Adani Enterprises, the flagship company of Adani group which launched FPO last week, were trading 3% higher at ₹2,956 levels. However, it stayed well below the offer price of the issue, which if successful will be largest such share offering ever in India. So far, the secondary share sale has received muted response from investors, with the issue subscribing by just 1% by Friday and 3% by Monday. The offer so far received bids for 13,98,516 shares against the issue size of 4,55,06,791 shares.
Meanwhile, Abu Dhabi's diversified group International Holding Company (IHC) has said it will invest $400 million in Adani Enterprises' FPO. "Our interest in Adani Group is driven by our confidence and belief in the fundamentals of Adani Enterprises Ltd; 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.
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.