Adani Enterprises, the flagship entity of Gautam Adani-led Adani Group is likely to file the red herring prospectus (RHP) with market regulator Sebi for its big-bang Rs 20,000 crores further public offering ( FPO) later this month, multiple industry sources with knowledge of the matter told Moneycontrol.
The move is seen as a step towards fulfilling the ambitious expansion plans of the port to power diversified conglomerate which has seen group stocks sizzle on the bourses in the past few years.
“The roadshows for the FPO began in December and are continuing and Adani Enterprises is looking to fill the RHP in the next few weeks,” said one of the persons cited above.
Two other persons confirmed the above and told Moneycontrol that the plan was to complete the deal before March 31, 2023, but a final call on the timing of the launch would be taken based on market conditions and investor appetite.
One of the two persons above elaborated, “typically in the case of such large issuances, firms want a wider, more diversified base of investors. Adani Enterprises would look to tap retail HNI’s and they also want to increase liquidity in the stock. The FPO proceeds would be used for growth capital and don’t forget - Adani Enterprises is an incubator which can buy a lot of assets under it.”
A fourth person told Moneycontrol that ICICI Securities and Jefferies were the investment banks that had initially been roped in for the deal, but some additions were made to the syndicate recently.
“Axis Capital, Elara Capital, SBI Capital, BoB Capital Markets, and IDBI Capital have also now come on board and more advisors may be added later,” he said.
Moneycontrol could not independently verify if any more i-bankers over and above the seven named above had been engaged by Adani Enterprises.
According to a fifth person familiar with ongoing deliberations, Adani Enterprises was looking to launch the deal under Sebi’s “fast-track FPO” mechanism. On June 9, 2020, Sebi issued a circular relaxing the eligibility conditions applicable to fast-track further public offers by listed companies.
All five persons above spoke to Moneycontrol on the condition of anonymity.
An email query (followed by reminders) sent to Adani Group was left unanswered at the time of going to press.
Moneycontrol has sent email queries and could not elicit an immediate comment from Jefferies, Axis Capital, SBI Capital, BoB Capital, Elara Capital, and IDBI Capital. ICICI Securities declined to comment. This article will be updated as soon as we hear from the firms.
A note dated June 15, 2022, by law firm Khaitan & Co explains the “fast-track FPO” route – “As the name suggests, a Fast Track FPO permits a listed company (which is compliant with specified eligibility conditions) to raise public funds within a significantly shorter duration - by “fast-tracking” the fundraising procedure. Such “fast-tracking” of procedure includes exemption from preparation and filing of a draft offer document with SEBI.
The note further added, “In essence, SEBI does not review and provide feedback on the offer document. This exemption reduces the overall time taken to access funds from typically a time frame of six to eight months to two three months.”
If it fructifies, the Adani Enterprises FPO would be arguably the biggest yet in India Inc, beating the previous record held by Yes Bank. In order to boost its capital levels in line with regulatory norms, the private sector lender launched an FPO in July 2022 to raise Rs 15,000 crores.
At the end of the day’s trade on January 9, the market cap of Adani Enterprises stood at Rs 4,39,379.23 crores. The promoter group holds a 72.63 percent stake while 27.37 percent is held by the public.
Read More: Adani group to invest $150 billion in pursuit of $1 trillion valuation
THE ADANI STRATEGY
On 25th November, Adani Enterprises announced that its board of directors had approved
(i) raising of funds by way of a further public offering through a fresh issue of Equity Shares by the Company aggregating up to ₹ 20,000 Crore;
(ii) and (ii) seeking approval of the shareholders for the aforesaid issuance by way of the postal ballot process.
The exchange disclosure further said,” Upon completion of requisite formalities and procedures, the details in respect of the Offer will be disseminated in accordance with the provisions of the SEBI ICDR Regulations and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”).
In December 2022, in an interview with Bloomberg, Jugeshinder Singh, Group CFO, of Adani Enterprises said the FPO,” gives the company maximum flexibility, including pricing at a discount to target more investors.” After tapping strategic investors in recent years, Singh said the conglomerate was looking for a broader investor base that doesn’t mind a company investing in long-term projects which can take time to show returns.
The further share sale is an outcome of a strategic decision taken several years ago -- to reorganize debt, bring in strategic investors, and then target patient capital for growth, Singh added in the interview.
The Adani Group plans to invest over $ 150 billion across businesses ranging from green energy to data centres to airports and healthcare as it looks to join the elite global club of companies with a valuation of $ 1 trillion.
Also Read: Adani Group’s $70-billion push may help India become net exporter of clean energy: Gautam Adani
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