Adani FPO subscribed despite ₹5.58 lakh crore market cap loss

The Adani Enterprises follow-on public (FPO) sailed through on the back of strong demand from Non Institutional Investors (NIIs) or Ultra High Networth Individuals (UHNWIs). Applications by NIIs that are entitled to bid above ₹10 lakh played a major role in successful completion of the FPO as the NII portion got bids amounting to 3.18 crore shares or 5.23 times of offered 60.89 lakh shares . Also, the portion for qualified institutional bidders evoked a healthy response with 1.32 times of offered 1.21 crore shares.

The company offered 6.14 crore fresh shares through FPO in which 1.21 crore shares, 91 lakh and 2.17 crore shares were kept for Institutional, NIIs and Retail category respectively. The issue was subscribed 1.32 times with bids of 6.91 crore shares against the issue size of 6.14 crore shares. As per market sources, the highest contribution came from family offices of UHNWIs.

Despite successful completion of the FPO, Adani Enterprises closed at ₹2,973, much below than the lower price band of ₹3,112 announced in the FPO. On Tuesday, the Adani Group lost ₹2,196 crore in market cap while the group has lost ₹5.58 lakh crore of market cap since the Hindenburg report and launch of FPO on January 24.

Since the announcement of FPO, Adani Total Gas lost ₹1.94 lakh crore, Adani Transmission lost ₹1.09 lakh crore, Adani Green lost ₹1.09 lakh crore, Adani Enterprises lost ₹53,000 crore, Adani Power lost ₹19,631 crore, Ambuja Cement lost ₹19,369 crore, Adani Ports lost ₹31,980 crore, and Adani Wilmer lost ₹13,809 crore, whereas ACC lost ₹6,776 crore.

But the FPO evoked lukewarm response from NIIs category that are entitled to bid under ₹10 lakh and retail investors that can apply for less than ₹2 lakh worth of shares. At the time of launching the FPO, Jugeshinder Singh, Group CFO of Adani Group told journalists that the “main aim of the FPO is to expand the shareholder registry.”

The objective of the FPO was to bring more retail investors into Adani Enterprises fold. But jittery retail investors stayed away from the FPO after Hindenburg Research published its damaging report last week on Adani Group. The retail portion barely touched double digit of subscription at 13% (0.13 times) of offered 2.17 crore shares. NII category between ₹2 lakh and ₹10 lakh got the lowest response as it could not even cross double digit and stood at just 3% (or 0.03 times) of offered 30.45 lakh shares.

The poor performance in retail and one of the NII categories might disappoint the group that currently commands a shareholder register of more than 48 lakh investors.