Adani says $2.5 billion FPO 'as per schedule' after report says bankers considering delay, price cut

The sale is being managed by Jefferies, India’s SBI Capital Markets, and ICICI Securities among others

Adani Enterprises on January 28 said its $2.5 billion or Rs 20,000 crore-follow-on public offer (FPO) will continue "as per schedule". The company's clarification came after a Reuters report, citing sources, said bankers on the FPO are considering to extend its closing date or slash the issue price.

A spokesperson of Adani Enterprises, while responding to the report, said an extension in the FPO's timeline or a change in its issue price is not being considered.

The FPO is "going as per schedule and the announced price-band", the spokesperson said, adding, "There is no change in either the schedule or the issue price. All our stakeholders including bankers and investors have full faith in the FPO. We are extremely confident about the success of the FPO."

Sources privy to the deal, who spoke to Reuters, had claimed that the bankers are exploring the option to extend the closing date beyond January 31.

They also claimed that the option of lowering the price for the FPO is being considered, with one of them saying it could be cut by as much as 10 percent. A decision was expected on January 30, the sources reportedly added.

Adani Enterprises had set a floor price of Rs 3,112 ($38.22) a share and a cap of Rs 3,276, but the company 's shares closed at Rs 2,761.45 apiece on January 27, which was the first day of the sale.

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Seven listed companies of the conglomerate controlled by one of the world’s richest men, Gautam Adani, have lost a combined $48 billion in market value since Hindenburg Research on January 24 flagged concerns about debt levels and the use of tax havens.

The Adani Group has called the report baseless and said it was considering taking action against Hindenburg.

The 20 percent fall in shares of Adani Enterprises, on January 27, dragged it 11 percent below the minimum offer price of the secondary sale.

On first day of retail bidding, the issue was subscribed around 1 percent, raising concerns over whether it would be able to proceed. "Everyone was shocked. They did not expect such a poor response,” one of the sources told Reuters.

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"Revision in price band or time extension of public issue can technically be undertaken with a newspaper advertisement and issuing an addendum,” said Sumit Agrawal, managing partner at Regstreet Law Advisors and a former officer of the Indian capital markets regulator.

At the end of the first day of the share sale, investors, mostly retail, had bid for around 470,160 of the 45.5 million shares on offer, according to Indian stock exchange data.

The sale is being managed by Jefferies, India’s SBI Capital Markets, and ICICI Securities among others. They did not immediately respond to requests for comment.

A fourth source said Adani management is also discussing the share sale internally to decide on next steps.

The Hindenburg report questioned how the Adani Group used entities in offshore tax havens such as Mauritius and the Caribbean islands. It said key listed Adani companies had "substantial debt”, which put the entire group on a "precarious financial footing”.

With Reuters inputs