Adani eyes $2.5 bn in pvt placements
The Adani group is considering a plan to raise as much as $2.5 billion by selling shares in four group companies, three months after it was forced to withdraw a follow-on public offer by flagship Adani Enterprises to raise the same amount.
Of the four companies, three—Adani Enterprises Ltd, Adani Green Energy Ltd and Adani Transmission Ltd—have already announced plans to raise an unspecified amount through private placements, two people aware of the matter said. Adani Ports and Special Economic Zone Ltd will soon announce a plan to hold a board meeting next week, the people said on condition of anonymity.
“To start with, the group will raise about $1 billion through the issuance of fresh equity in a private placement of shares,” said one of the two people cited above, both of whom spoke on condition of anonymity.
The boards of Adani Enterprises, Adani Green Energy and Adani Transmission will meet this Saturday “to take an enabling resolution” to raise a total of around $2.5 billion in FY24, the person said, adding the Adani Ports board will discuss the fundraising plan next week.
Across Wednesday and Thursday, Adani Enterprises, Adani Green Energy and Adani Transmission said their boards would meet on 13 May at Ahmedabad to consider and approve the proposal of raising funds by issuing equity shares through a private placement such as qualified institutional placement (QIP), preferential allotment or a combination of methods. Adani Ports is yet to make an announcement. “The group plans to raise $1 billion via share sales in Adani Transmission, Adani Green and Adani Enterprises and Adani Ports. The proceeds from this $1 billion will be primarily used to partly fund the group’s $3.8 billion capex planned for FY24. The balance capex will be funded through the issuance of fresh bonds,” said the first person.“The companies are taking the enabling resolution from their boards for the equity fundraising now because once demands or offers start coming from potential investors (at the right price), the companies should be able to raise the amounts immediately,” the first person added. A board resolution and shareholder approval are mandatory for QIPs as per norms.
“If the board resolutions are not taken in advance, it often unnecessarily delays the fundraising process by over 30 days which, in turn, may again expose the stocks to unwanted market volatility,” the person added while explaining the rationale behind the timing of the board meetings, even as the stocks of Adani Group firms are still recouping their losses. An email sent to an Adani group spokesperson remained unanswered till press time.
The Adani Group, following a 24 January report by US-based short-seller Hindenburg Research, lost over $140 billion in market value and was forced to call off its flagship Adani Enterprises’ fundraising on 1 February. According to the people cited above, the group is now planning to raise most of the $2.5 billion via QIPs, issuing new shares to large offshore funds, including asset managers, private equity funds and sovereign wealth funds. Boards of three Adani group companies have planned their meetings just a day after the scheduled Supreme Court hearing on the ongoing Adani-Hindenburg case on 12 May. On 2 March, the apex court asked the markets regulator to probe Hindenburg’s allegations of stock “price manipulation” by the Adani group and lapses in regulatory disclosures within two months. To be sure, Adani group stocks have steadily recovered over the past few weeks, indicating a waning effect of the Hindenburg report.