Adani: 2 Adani companies set to raise Rs 21,000 crore from share sales via QIP route

MUMBAI: Two companies controlled by billionaire Gautam Adani will collectively raise Rs 21,000 crore from share sales, less than four months after a scathing report by a short seller plunged his empire into a crisis, drove share prices down and battered investor confidence, reports Reeba Zachariah.
Adani’s flagship company Adani Enterprises will raise Rs 12,500 crore through the qualified institutional placement (QIP) route, while electricity distributor Adani Transmission will raise Rs 8,500 crore through the same mode. His renewable energy firm Adani Green Energy too plans to raise funds and had scheduled a board meeting on Saturday, but postponed it to May 24. While both Adani Enterprises and Adani Transmission didn’t disclose the purpose of their fund raises, Adani Group observers said the money will be used to improve their balance sheets. The two will need shareholders’ nod to go ahead with their fund-raise programmes.
Adani QIP move to be key investor test after scrapping of FPO in February
This will be Adani’s second fund-raiser after he and his family in March sold shares of four companies – Adani Enterprises, Adani Transmission, Adani Green Energy and Adani Ports & SEZ – worth Rs 15,446 crore to Australia-listed US-based asset manager GQG Partners.
This will also be a pivotal investor test in Adani’s business empire after he called off flagship company’s Rs 20,000-crore further public offering (FPO) in February in the wake of short seller Hindenburg Research’s report accusing his conglomerate of wide-ranging fraud.
Unlike an FPO, which comes under a public issue, QIP is a private placement, where a company issues shares to sophisticated institutional investors and not to retail investors, and is quicker to close, said J Sagar Associates‘ partner (capital markets) Arka Mookerjee. Promoters will also see their stake diluted in the post equity capital of the company.
QIP will also help a company to broaden its investor base, Mookerjee further said.
Adani and his family directly and indirectly hold 69% in the Adani Enterprises, while they own about 72% in Adani Transmission.
Shares of both the companies ended at Rs 1,965 and Rs 885 on the BSE on Friday.
Although stock of all of Adani’s 10 listed companies within the group have risen in recent months, they remain far below the highs they have hit prior to January 24, a day before the Hindenburg report was published.