Adani's $2.5 Billion Share Offering Faces Critical Final Day - BNN ...
(Bloomberg) -- The selloff in Adani Group shares continued on Tuesday as Asia’s richest man seeks to complete a $2.5 billion equity sale by its flagship firm amid the turmoil triggered by short-seller Hindenburg Research.
Adani Total Gas Ltd. plunged by 10% daily limit to lead losses in most of the group’s stocks. Flagship Adani Enterprises Ltd. was up about 2% in early trading in Mumbai, but remained below the floor price set for its follow-on share sale. Ten of the conglomerate’s companies have seen about $75 billion in market value erased as the rout entered a fourth session.
Overall subscription for the equity offering, largest of its kind in India, stood at just 3% as of end Monday, signaling that demand likely took a hit due to allegations from Hindenburg Research that the Indian conglomerate used a web of companies in tax havens to inflate revenue and stock prices as debt piled up.
That’s caused some analysts following the share sale to be skeptical about whether there will be enough demand under the current terms even after a $400 million investment from International Holding Co. IHC, which is controlled by a key member of Abu Dhabi’s ’s royal family.
“IHC’s participation may lend some tactical sentiment support but they have been investors in the group before the FPO too,” said Nitin Chanduka, an analyst with Bloomberg Intelligence. “Markets will look for more clarity on the allegations before a meaningful uptick in the group’s stocks,” he said on the broader outlook.
Adani is seeking to execute the landmark share sale to repay some of the group companies’ debt just as it refutes allegations made by Hindenburg last week. The rapid decline in share prices has eroded the billionaire’s personal wealth and also weighed on India’s stock market, where some of his companies were the top performers last year.
There will be no change to the pricing and the share sale will proceed as scheduled, Adani Group CFO Jugeshinder Singh told news channel CNBC TV-18 in an interview earlier.
While investors in Indian public offerings typically wait until the last day of the sale — Tuesday — to place bids, other large-size follow-ons before Adani’s have had much stronger adherence after two days of books open.
One such offering by Yes Bank Ltd. in July 2020, which raised $2 billion, had subscription of about 24% of shares on sale on the first day of the offering, according to a report by Mint newspaper at that time. The percentage rose to 53% on day two, before finally hitting 95% at the end of the offering.
For Adani’s sale, retail investors had bid for 4% of the shares on offer to them, while the company’s employees bid for 13% of the shares for their category. The non-institutional part that includes wealthy individuals had been taken up 5%. Qualified institutional investors bid for 4,576 shares, a fraction of the 12.8 million on offer.
On the positive side, Adani Group companies rebounded in the dollar bond market after some dropped to record lows the day before.
--With assistance from Ashutosh Joshi.
©2023 Bloomberg L.P.
