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HomeNEWSAdani Enterprises: Adani flagship plans up to $2.5 bn FPO after stock...

Adani Enterprises: Adani flagship plans up to $2.5 bn FPO after stock surges 26x in 5 yrs

Mumbai: Gautam Adani’s flagship Adani Enterprises has initiated its much awaited follow on public offer (FPO) offer to raise as much as Rs 20,000 crore ($2.5 billion) from retail and institutional investors and have mandated Jefferies and riding on the meteoric 26-fold jump of its stock prices, said multiple persons in the know.

The company on Tuesday informed the stock exchanges that the company will hold a board meeting on Friday, 25th November 2022 at Ahmedabad, “to consider and approve the proposal of raising of funds by way of further public offering, preferential allotment (including a qualified institutions placement or through any other permissible mode) and/or combination thereof as may be considered appropriate, by way of issue of equity shares or any other eligible securities, subject to all such regulatory / statutory approvals.”

The promoter holding in

is 72.63% as per BSE data. The capital raise will boost the diversified business group as it grows aggressively across business verticals both organically and via acquisitions. An FPO will also increase the public float in the stock, which is a lot less compared to similar sized listed companies like and (). As on Tuesday, the market capitalisation of Adani Enterprises was Rs 4,60,058.85 crore.

More banks are expected to join the offering, but Jefferies and ICICI Securities have already sounded out institutional investors to gauge their mood. By next month, more clarity on quantum and timeline is expected to emerge, though sources expect the issuance to hit the capital markets this financial year, unless a public market meltdown forces a pull out.

Mails sent to Adani Enterprises did not generate a response till press time.

Among public investors, FIIs own 15.59% of the company, while the public and mutual fund shareholding is only 6.46% and 1.27%, data showed. The FII holding has come down from March 2021, when it was 20.51%. In May 2022, the MF holding too was at the highest at 2%. The promoter holding has only shrunk from its historic highs of 74.92% (from Dec 2020-March 2022). Among domestic investors,

held the largest chunk with a 4% exposure.

On September 29,
Financial Times was the first to report that Adani is planning to tap the equity markets and raise public float.

Adani Enterprises was listed in 1994. Currently it is the group’s holding company across its swathe of infrastructure businesses – airports, ports, mining, agriculture, data centre, defence, cement, agriculture and warehousing.

“Most of the businesses it incubates are capital intensive like data centres, railways, mining or even airports. But several global investors are wary of its coal exposure and have stayed away due to ESG concerns,” said an old Adani watcher, who did not wish to be identified. “Its best if they demerge each of these businesses as they scale up.”

However, some market watchers have baulked at the debt-fuelled expansion of the conglomerate and the lack of broader coverage by equity research analysts. Recently the firm sparked a controversy over disagreements with a Fitch Group firm CreditSights that called the group “deeply over leveraged,” pegging the conglomerate’s total debt at $28.80 billion. Adani challenged the figure and subsequently, the ratings and research company softened the tone of its observation but stuck to its main conclusion that billionaire Gautam Adani’s empire has too much debt.

However, equity markets have rewarded the group’s stocks with several of them among the top performers in the broader Indian market this year. Earlier this year, an offshore arm of Adani Enterprises bought Holcim’s Indian cement assets, Ambuja and

Cement, for $10.5 billion – the group’s buyout thus far. Later this August, AMG Media Networks, also an Adani Enterprises arm, launched the acquisition of broadcaster . On November 22, it launched its open offer after receiving the stock market regulator’s approval.

Adani Enterprises’ consolidated revenue in Q2FY23 surged nearly threefold year-on-year (YoY) to touch Rs 38,175 crore, the company announced earlier in November, with consolidated net profit for the quarter more-than-doubling from last year’s Rs 461 crore.

The robust growth in the topline and operational performance was on account of a strong earnings show by the integrated resource management business and airports vertical, the company said in a statement. Integrated resource management includes coal management operations. This business gives Adani Enterprises, led by billionaire Gautam Adani, almost 80 per cent of its revenue. The airports’ business, which contributes over 3 per cent to revenue, increased nearly three times from the year-ago period to Rs 1,292 crore. The mining business, which contributes close to 5 per cent to the topline, reported a threefold jump in Q2 revenue to Rs 1,858 crore.

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