Adani FPO: What saved the issue on the last day of bidding?

On January 23, 2023, the Adani Enterprises share price was trading at ₹3,434.50. Meanwhile, the price band for the issue was set at ₹3,112 – 3,276 per FPO equity share and a discount of ₹64 per share was being offered to retail individuals. That was a tempting price.

On January 25, the company raised ₹5,984.9 crore for the anchor investor portion from 33 foreign and domestic institutional investors including the likes of Singapore based Maybank Securities Pte Ltd, insurance behemoth LIC, SBI Employees Pension Fund, SBI Life Insurance Co, HDFC Life Insurance Co, Abu-Dhabi-based sovereign wealth fund ADIA, Goldman Sachs Investment and Morgan Stanley Asia.

Just when the merchant bankers and the company were rejoicing the high demand, Hindenburg Research alleged that the Adani group of a fraud and said that it holds short positions in the stock, sending Adani Enterprises and 6 other stocks of Adani group companies into a free fall.

Since then the company has been in a image correction mode, with the group CFO, Jugeshinder “Robbie” Singh, coming out in public and denying all the allegations aimed at them. He said: “If you are in a match of kickboxing, to expect that there will be no kick landing on you is a false assumption. These things happen, and you are mentally prepared for this. It hasn’t altered anything.”

All this, to help its FPO, which opened for bidding on January 27 and closed today, sail through.

Read all Adani-related stories here

At the end of the third and final day of bidding, the retail investors (who the company aimed to capture through the issue) were missing as they could easily buy the company’s shares at much cheaper rate.

On January 27, the stock went as low as ₹2,762.15 and on January 30, it fell to ₹2,681 – which is even lower than the issue price, so clearly the pricing was not lucrative for the retail investors who could easily procure shares at lower price.

The demand on first two days of bidding for the FPO was nearly nil, but the turning point for the FPO was Abu Dhabi’s International Holding Company (IHC) on Monday announced that will invest $400 million in Adani Enterprises’ ₹20,000-crore follow-on public offer (FPO) via its subsidiary Green Transmission Investment Holding RSC.

At the end of the third day of bidding, the issue finally sailed through with over-subscription at 112% led by strong demand from Non-institutional investors (NIIs) and Qualified Institutional Buyers (QIBs).

Portion set aside for retail investors was barely subscribed 0.12 times.

NIIs put in bids for over three times the 96.16 lakh shares reserved for them. Around 1.28 crore shares reserved for qualified institutional buyers, or QIBs, was almost fully subscribed, according to the data on stock exchanges.

Some experts say, it made sense for big institutional investors to pick up shares at high quantities from FPO as it is not always possible to procure shares in high quantities from the open market.

Speculations are running rife on Twitter as to who saved the day for the company, some say other big Indian conglomerates helped.

As of now there is no confirmation from official sources as to who invested how much money. But we will know more in the coming days as to who helped the FPO sail through and what the listing price for the same could be