The follow on public offering (FPO) of Adani Enterprises Ltd was oversubscribed 1.12 times on its final day, driven by strong response from non institutional investors (NIIs) and qualified institutional buyers (QIBs). Retail investors, however, stayed away from the FPO subscription because of the significant price difference in stock price and the FPO price band.
According to BSE data, the company receiving bids for 5,08,68,352 shares against 4,55,06,791 shares on offer at 19:00 IST. The portion reserved for NIIs was oversubscribed 3.32 times, followed by QIBs portion, which was subscribed 1.26 times, and employee portion was subscribed 55%. The retail investors was subscribed only by 12%.
The public issue that opened for subscription on Friday, January 27, will close on Tuesday, January 31.
The company fixed the price band at ₹3,112 to ₹3,276 per equity share for the proposed offer.
The Adani Enterprises stock on Tuesday closed at ₹2947, down nearly 7 percent than the lower limit, and over 11 percent than the upper limit of the price band.
Despite the stock price trading lower than the fixed price band, the company in an interview with CNBC-TV18 on Monday said that the FPO will go as scheduled and there won't be any changes to the price.
On Day 1, the public offer was subscribed by only 1 percent of the total offer, and on Day 2 the FPO was subscribed by 3%.
On the backdrop of Hindenburg Research's allegation of ‘fraud’ on the Adani Group, shares of the companies have hit lower circuits in the last few trading sessions and lost market caps sharply.
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.