Wednesday, March 29, 2023

$2.5 bn share sale on track: Adani Group

Bankers mull changes

A $2.5 billion share sale by India’s Adani Enterprises (ADEL.NS) remains on schedule at the planned issue price, the company told Reuters on Saturday, while sources said bankers were considering changes due to a market rout in the group’s shares, reports Reuters. Bankers on the deal were considering extending the sale or cutting the issue price after shares of Adani plunged following a report from a U.S. short seller, three people familiar with the matter told Reuters on Saturday. Adani Group in a statement said: “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 (Follow on Public Offer). We are extremely confident about the success of the FPO,” it said.
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 Tuesday flagged concerns about debt levels and their use of tax havens.
The Adani Group has called the report baseless and said it was considering taking action against Hindenburg. Sources had said that among the options the bankers were considering included extending the Tuesday subscription closing date by four days.
Friday’s 20% fall in shares of group flagship Adani Enterprises dragged it 11% below the minimum offer price of the secondary sale. On the first day of retail bidding on Friday, the issue attracted around 1% of its targeted number of subscribers, raising concerns over whether it would be able to proceed.
Investors, mostly retail, had bid for around 470,160 of the 45.5 million shares on offer, stock exchange data showed. “Everyone was shocked. They did not expect such a poor response,” one source said.
The other option being considered by bankers is lowering the price, the sources said, with one saying it could be cut by as much as 10%. Adani had set a floor price of 3,112 rupees ($38.22) per share and a cap of 3,276 rupees – well above their close at 2,761.45 rupees on Friday. A decision was expected on Monday, the sources said.
“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. 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. 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”.

MSCI seeks feedback on Adani Group over Hindenburg report
Index provider Morgan Stanley Capital International (MSCI) said on Saturday it is seeking feedback on Adani Group and associated securities and is aware of a report issued by short-seller Hindenburg Research.
The U.S. short-seller said on Wednesday it held short positions in the Indian conglomerate, accusing it of improper use of offshore tax havens and flagging concerns about high debt, leading to a massive sell-off of India-listed shares of the conglomerate’s companies.
“MSCI is closely monitoring publicly available information regarding the situation and the factors that may impact the eligibility of those relevant securities for the MSCI Global Investable Market Indexes,” it said in a statement.
All Adani group stocks barring Adani Wilmar are in the MSCI Global Standard Index and also FTSE Indices. Adani Ent, Adani Ports, Adani Trans, Adani Total Gas, Adani Power, ACC, Ambuja & Adani Green are present in MSCI Standard Index & FTSE World Indices
The statement claims MSCI will decide on the treatment of Adani stocks indices after receiving feedback and consultation.


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