Adani Enterprises’ ₹20,000 cr FPO set to open on this week. 10 key points

FPO is when an already listed company makes either a fresh issue of shares or convertible securities to the public or an offer for sale to the public.

Last week, on Friday, Adani Enterprises stock ended at ₹3,456.40 apiece marginally down on BSE compared to the previous session. Adani Enterprises’ market cap is around ₹3,94,029.99 crore. 

The price band of equity shares offered under the FPO is currently at a discount between 5% to 10% from Friday’s closing price.

The proposed fundraising via FPO comes when concerns have been raised about Adani’s elevated debt levels and large promoter shareholding. Previously, debt research firm CreditSights, part of the Fitch Group, stated that Adani would continue to seek strategic equity partners after flagging concerns over the group’s elevated debt levels. As of September 30, 2022, Adani’s net external debt is around ₹33,517 crore.

Here are 10 key points of the FPO.

1. Under the FPO, a total of 6,47,38,475 equity shares will be offered to investors. The minimum bid lot is set at four FPO equity shares and in the multiples of four FPO equity shares thereafter.

2. The floor price for the FPO is fixed at a minimum of ₹3,112 per FPO equity share and the cap price is ₹3,276 per FPO equity share for all categories of investors.

3. Adani has also announced a discount of ₹64 per FPO equity share for retail investors bidding under the retail portion of the offer.

4. Bidding for the FPO will open for anchor investors on January 25. While the bid will open for the remaining investors including retail investors on January 27. The closing date of the offer is set for January 31st.

6. Book-running lead managers of the FPO are — Axis Capital, ICICI Securities, Jefferies India, SBI Capital Markets, BOB Capital Markets, IDBI Capital Markets & Securities, JM Financial, IIFL Securities, Monarch Networth Capital, and Elara Capital (India). While Axis Bank and ICICI Bank are the sponsor banks for the offer, and Link Intime India is the registrar.

7. Adani’s FPO committee is scheduled to meet on January 25 to decide on the allocation of equity shares to successful anchor investors in the offer and the determination of the anchor investor allocation price. Also, the committee will meet on February 1st for the approval of the offer price and prospectus. That being said, allotment of equity shares, refund, Demat allocation, and listing under the offer is expected to take place between February 3rd to February 8th.

8. If the FPO is fully subscribed, then Adani’s ₹20,000 crore offer will become the second largest follow-on public offer in India after Coal India’s ₹22,558 crore issue in 2015. Earlier in 2020, Yes Bank had launched a ₹15,000 crore FPO.

9. The massive share sale by Adani is expected to support the Group to meet several goals. Adani is expected to utilise a portion of the proceeds for capital expenditure requirements and to clear off some debt of its units such as Adani Airport Holdings Ltd, Adani Road Transport Ltd, and Mundra Solar Ltd. Of the total ₹20,000 crore proceeds of the FPO, the plans to utilise ₹10,869 crore for green hydrogen projects, work at the existing airports, and construction of a greenfield expressway.

10. Adani’s board of directors in November last year approved a decision to raise funds aggregating up to ₹20,000 crore through FPO and plans to dilute a 3.5% stake through the FPO. At present, the promoter group’s shareholding is to the tune of 72.63% or 82,79,49,621 equity shares in the company. While public shareholders hold a 27.36% stake in the company.