Adani confident of successful FPO; SEBI, other regulatory bodies probing the sell-off

richest asian Gautam AdaniThe K Group on Sunday expressed confidence that its flagship firm’s ₹20,000-crore follow-on share sale will be surpassed following a grim report by a US-based short seller, despite a sharp fall in group shares.

Group CFO Jugshinder Singh said that there is no change in the offer price or schedule due to temporary volatility in the market as Adani Enterprises Ltd’s follow-on public offer (FPO) is the best vehicle for strategic institutional investors. The group’s fast-growing airports, mining, roads, new energy and data center businesses.

Shares of all seven Adani group companies declined sharply in the last two trading sessions, after which investors lost ₹10.7 lakh crore. Hindenburg Research alleged that the port-to-energy-to-cement conglomerate had engaged in “brazen stock manipulation and accounting fraud” for decades.

tracking sales market regulator SEBI and stock exchange.

In an interview to PTI, Mr Singh said the group would issue a comprehensive response to the Hindenburg report, “providing documentary evidence” that would “clearly underline that no research was done and there was no investigative report. Only Pure misrepresentation of unsubstantiated factual positions, if not outright lies.” he exemplified Hindenburg Report Alleging that inflation in revenue was visible from the assets transferred to a private company and that the private company was immediately writing off that asset.

“This is a complete misrepresentation of our disclosures. Adani Enterprises Limited (AEL) had already written off that asset and AEL had already booked loss, after which that asset went to a private party. It is related to was disclosed as a party transaction. They (Hindenburg) simply took half of it and therefore it is a deliberate misrepresentation and lie. And the (Hindenburg) report is full of such points,” he said. “He deliberately misled.” He expressed confidence that the FPO of AEL would go on schedule and be fully subscribed by the end of the offer period on January 31.

The share sale – the second largest in India – was subscribed just 1% on the opening day on Friday. As per information available with BSE, against the offer of 4.55 crore shares of AEL, only 4.7 lakh were subscribed.

AEL fell to trade nearly 20% below the offer price of its secondary sale as all seven listed companies of the group took a hit in the aftermath of the Hindenburg Report. The firm is selling shares in the price band of ₹3,112 to ₹3,276. Its share price closed at ₹2,762.15 on the BSE on Friday.

“All our stakeholders including bankers and investors have reposed full faith in the FPO. We are extremely confident of the success of the FPO,” he said.

Adani Enterprises on Wednesday raised Rs 5,985 crore from anchor investors.

When asked why would an investor subscribe to the FPO when the same shares are available in the open market at a lower price, Mr. Singh said that AEL has very limited free float and hence retail investors can look for 50-100 shares. Can market, a strategic institutional investor will not get the share of shares he needs.

“For an institutional investor who prefers large holdings, that option is not available as there is no free float,” he added. “One of the primary objectives of FPO is to increase the liquidity and free float of the shares.” He further added that strategic long term institutional investors are not investing in AEL just for the value of the shares. “They are investing in AEL as an incubator. The value of AEL sits high in the airports business, in the road business that it is doing, in the new energy projects that it is doing, in the data center business and the mining business. In. All of these businesses are doing very well.” AEL currently has new businesses such as hydrogen, where the group plans to invest $50 billion in the value chain over the next 10 years, spanning airport operations, mining, data centers and roads and logistics . These businesses are planned to be demerged between 2025 and 2028 after achieving basic investment profile and maturity.

“Investors investing in AEL will get those businesses as well. They see that the long-term value is still there. So short-term volatility in prices doesn’t affect the value of the airport business, the value of the road business, the value of the new energy ventures.” And for the value of data centres. For long-term investors who want chunky positions, this (FPO) is the best option,” he said.

The group is looking to become one of the lowest cost producers of hydrogen – the fuel of the future with a zero carbon footprint. It is also betting big on its airport business with an aim to become the largest service base in the country in the coming years outside government services.

Mr Adani, 60, started as a businessman and has been on a rapid diversification spree, expanding an empire centered on ports and coal mining to include airports, data centers and cement as well as green energy did. He is also the owner of a media company now.

Mr Singh said the objective of the follow-on share sale is to widen the shareholder base by bringing in more retail, high net worth and institutional investors.

It will also address the liquidity concerns by increasing the free float, he said, adding that the company wants to increase the participation of retail investors and that is why it chose the primary issue instead of the rights issue.

AEL will use the money raised to fund green hydrogen projects, airport facilities and greenfield expressways, apart from reducing some of its debt.

On the selloff in the group’s shares, he said the group is concerned about the impact on minority small investors and hoped regulatory authorities would “look into” the “deliberate” attempt to create “additional volatility”.

“That (selling) is something that should be looked at,” he said without elaborating.

Despite this, “we are confident that the resolution will pass,” he said.

Asked whether the retail portion would also be fully subscribed, he evaded a direct answer, saying, “We are confident that the issue will be fully subscribed.” On Friday, retail investors placed bids for nearly 4 lakh shares against 2.29 crore shares reserved for them, while qualified institutional buyers (QIBs) sought only 2,656 shares against 1.28 crore shares reserved for them. Non-institutional investors sought 60,456 shares against the offer of 96.16 lakh shares.

On the response that the company will throw light on the Hindenburg Report, Mr. Singh said that the group has given a comprehensive response in 3 days time for a report which reportedly took 2 years to prepare.

On taking legal action against the US firm, he said, “We have now discovered one part which is that this report is a misrepresentation.” The second part would be to understand the intent to cause harm to the Indian shareholders and business. It would be legal. Review and once it is over it will be considered.”