Samie Modak
1 Feb 2023
Even though AEL's share price continued to languish below its issue price, the FPO managed to garner 1.12 times subscription, attracting bids worth over Rs. 16,000 Crore.
The Adani group on Tuesday pulled off the 20,000- crore fol-low-on public offering (FPO) for its flagship company, Adani Enterprises (AEL), despite the storm created by US short seller and investment research firm Hindenburg Research through a barrage of allegations against the conglomerate. Even though AEL's share price continued to languish below its issue price, the FPO managed to garner 1.12 times subscription, attracting bids worth over Rs. 16,000 crore. Over 60 per cent of these bids came from high networth individuals (HNIs). The quota reserved for HNIs was subscribed 3.3 times.
According to market sources, several ultra-rich individuals of the country invested in the FPO through their family offices. The Three day FPO, however, didn't see a single bid from domestic financial institutions and mutual funds (MFs). MFs also didn't participate in the anchor book. The institutional investor portion garnerd 1.26 times subscription with bids worth Rs. 5,276 crore.
Abu Dhabi based International Holding Company (IHC) had committed to investing about Rs. 3,200 crore in the issue. The retail portion was subscribed just 12 per cent, and saw bids to the tune of Rs. 900 crore. Ahead of the FPO, AEL had allotted shares worth Rs. 5985 crore to anchor investors at Rs. 3,276 a share. In the anchor book, May bank securities subscribed to shares worth Rs. 2040 crore, while state owned LIC applied for Rs. 300 crore worth of shares.
Shares of AEL closed at Rs. 2975 on Tuesday, up 3.4 per cent over the previous day's close. The price band for the FPO was Rs. 3,112-3,276 a share - 4.4 - 9.2 per cent higher than the last close. Retail investors were offered a discount of Rs. 74 per share on the soon-to-be-finalised issue price. In the past four trading sessions, the company has shed 13.6 per cent.
Market players said AEL garnering full subscription despite the tumult following the Hindenburg report was a remarkable feat. On the penultimate day, the issue was subscribed just 3 per cent, stoking buzz that AEL may lower its price band and extend the issue date. Besides the Rs. 20,000 crore fundraise, AEL's FPO was set to diversify its shareholder base. However, this goal may not have been fully achieved as many retail investors and MFs abstained from participating amid a rout in Adani group stocks.