Adani Enterprises to launch FPO worth whopping Rs 20,000 crore by  January end

Adani Enterprises : Billionaire Gautam Adani’s flagship company Adani Enterprises, filed an offer letter for a proposed follow-on public offer (FPO) worth Rs 20,000 crore with stock exchanges, on Monday.

The Adani FPO is India's third-largest offering and is expected to be launched in the last week of January, according to media reports.  It is likely to file the papers for the same with the Securities and Exchange Board of India (Sebi) within two days. However, Adani Group is yet to confirm the news.

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What’s an FPO

A company, which is already listed on the stock exchange, issues new shares to the investors or the existing shareholders to raise funds through an FPO. FPO is used by companies to diversify their equity base.

Adani Enterprises’ Board of Directors had announced a follow-on share sale aggregating up to Rs 20,000 crore in November last year. Some bankers said Adani Enterprises could raise money in the FPO by issuing partly paid-up shares.

Sources said the company might give a discount to the retail investors in the FPO. The stock has rallied 94% in the last one year and 1,760% in the last five years.

The company has appointed Jefferies, ICICI Securities, SBI Capital, Bank of Baroda Capital, JM Financial, and Elara Capital, among others, as bankers for the FPO.

Sources said the company aims to finish the entire fundraising exercise before the Budget. It also aims to attract retail investors through this offer in order to boost retail participation in the FPO.

Promotes stakes may fall

However, the promoters face the risk of fall in their stakes by 3.5% because of FPO. The promoters owned 72.63% of Adani Enterprises, while the remaining 27.37% was with public shareholders, as of September 2022.

Life Insurance Corporation owned 4.03% stakes among the public shareholders while Nomura Singapore, APMS Investment Fund, Elara India Opportunities Fund, and Lts Investment Fund held between 1% and 2% stakes in the company.

However, the fundraising exercise will reduce debt of Adani. The group has a gross debt of Rs 2.2 lakh crore, which is a cause of concern for investors in the market.

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