Adani Enterprises FPO sees muted response on Day 1; only 1% of overall issue subscribed

Updated: 27 Jan 2023, 08:42 PM IST
TL;DR.

  • The company received bids for 4,70,160 shares against 4,55,06,791 shares on offer, according to data from the BSE.

The FPO will remain open for subscription till Tuesday, January 31.

The follow on public offering (FPO) of Adani Enterprises Ltd saw a muted response from qualified institutional buyers, non institutional investors, retail individual investors, and employees on Day 1 with only 1 percent of the total offer subscribed.

The company received bids for 4,70,160 shares against 4,55,06,791 shares on offer, according to data from the BSE. The portion reserved for employees was subscribed 4 percent, the retail portion was subscribed 2 percent, the non institutional investors' portion was subscribed 1 percent, while the qualified institutional buyers' portion received bids for 2,656 shares against 1,28,21,336 shares.

The public issue that opened for subscription on Friday, January 27, will close on Tuesday, January 31.

Also Read: Adani Enterprises FPO opens on January 27: Should you subscribe or avoid?

The company has fixed the price band at 3,112 to 3,276 per equity share for the proposed offer. 

On the backdrop of a report by Hindenburg Research that claimed that Adani Group had participated in a clear stock manipulation and accounting fraud scheme over decades, the shares of the company in the past two trading sessions lost 20 percent.

On Friday, the stock closed at 2,768.50, 11 percent down than the lower limit, and 15 percent than the upper limit of the price band. 

On Wednesday, January 25, the anchors took up 29.92 percent of the FPO's size. The anchors purchased 1,82,68,925 shares of the 6,10,50,061 shares that were offered. 23 key anchor investors received a significant portion of the Rs. 5,984.90 crore total anchor allocation.

The company did not grant any shares to domestic mutual fund schemes out of the total 1,82,68,925 shares issued through anchor placement. The insurance companies made up the majority of the domestic institutional participants.

A total of 6,47,38,475 equity shares will be made available to investors through the FPO. Four FPO equity shares constitute the minimum bid lot, with subsequent bid lots being in multiples of four shares.

Retail investors who place bids under the retail portion of the offer will receive a discount of 64 rupees per FPO equity share from Adani.

From its new follow-on issue, the company hopes to raise 20,000 crore, and the FPO's net proceeds will be used to pay debts (in full or in part) and cover some of the company's subsidiaries' capital expenditure needs.

According to brokerage reports, the company plans to fund capital expenditure requirements of some of the subsidiaries in relation to certain projects of the green hydrogen ecosystem, improvement works of certain existing airport facilities, and construction of greenfield expressway.

Retail portion of the offer makes up at least 35 percent of the net offer, NII portion makes up at least 15 percent of the net offer, and QIB portion makes up to 50 percent of the net offer, according to the company's draft red herring prospectus (DRHP).

Axis Capital Ltd, ICICI Securities Ltd, Jefferies India Pvt Ltd, SBI Capital Markets Ltd, BOB Capital Markets Ltd, IDBI Capital Markets & Securities Ltd, JM Financial Ltd, IIFL Securities Ltd, Monarch Networth Capital Ltd and Elara Capital (I) Pvt Ltd are the book-running lead managers of the FPO, and Link Intime India Pvt Ltd is the registrar.

IPO is the first public issue of the shares of a private company whereas FPO is the second public issue of the shares of an already listed public company.
First Published: 27 Jan 2023, 08:42 PM IST