Adani is seeking to execute the landmark share sale just as it refutes allegations by Hindenburg that the Indian conglomerate used a web of companies in tax havens to inflate revenue and stock prices.
The sale of 200 billion rupees ($2.5 billion) worth of shares by Gautam Adani’s flagship company concludes on Tuesday, the day that will determine whether or not he remains Asia’s richest man, despite the chaos caused by short-seller Hindenburg Research
Due to a widespread three-day selloff that has destroyed more than $68 billion of market value from Adani Group firms, shares of Adani Enterprises Ltd. have fallen by nearly 7% below the floor price set for the follow-on equity offering. Just 3% of the offer’s total subscription, which is India’s largest follow-on stock sale, was made as of Monday’s conclusion.
Following the share sale, this has led several experts to express doubt about whether there will be adequate demand under the current conditions. Adani, though, will be hoping that the investment from International Holding Co. of Abu Dhabi.
aids in rebuilding faith in his ports-to-cement company and draws customers on the final day. A significant member of the emirate’s royal family controls IHC, which said on Monday that it will invest around $400 million in the share sale.
IHC’s involvement may provide some tactical sentiment support, although they were also investors in the group before to the FPO, according to Nitin Chanduka, a Bloomberg Intelligence analyst. Regarding the general picture, he stated that “markets will look for more clarity on the claims before a major upswing in the group’s stocks.”
Adani is attempting to complete the historic share sale as it denies claims made by Hindenburg that the Indian giant utilised a network of businesses in tax havens to artificially boost earnings and stock values while debt accumulated.
The pricing will remain the same, and everything will go as planned, Adani Group CFO Jugeshinder Singh previously told news outlet CNBC TV 18.
The last day of the sale is traditionally when investors in Indian public offerings put their bids, although prior large-size follow-ons before Adani’s have seen substantially stronger adherence after two days of books open.
According to a report by the Mint newspaper at the time, a similar offering by Yes Bank Ltd. in July 2020 that raised $2 billion had subscription of around 24% of the shares on sale on the first day of the offering. On day two, the percentage increased to 53%, and by the end of the offering, it reached 95%.
Retail investors had bid for 4% of the shares offered to them in the sale of Adani, while firm personnel had bid for 13% of the shares offered to them. The non-institutional portion, which consists of affluent people, made up 5% of the total. A portion of the 12.8 million shares that were offered, or 4,576, were purchased by qualified institutional investors.
Some market observers have more optimistic outlooks.
“Adani Enterprises could rally today as the likelihood of the FPO subscription reaching 90% improves dramatically,” said Brian Freitas, an equities analyst who publishes on the platform Smartkarma, after the IHC investment announcement. “Still, the issues raised in the Hindenburg report will be an overhang for the near future.”