After a five-fold jump in the share price of Adani Enterprises Ltd (AEL) in the past two years, the flagship company of Adani Group has offered ₹67 discount to retail investors on the price band of the follow-on public offer (FPO). AEL is raising ₹20,000 crore through the FPO that will start on January 27 and close on the last day of the month.
Adani Group’s Chief Financial Officer Jugeshinder ‘Robbie’ Singh said AEL was raising funds via FPO instead of other modes to expand the shareholder base. “We want to increase the participation of the common Indian (in Adani group). It allows them to be a part of the wealth creation that Adani Enterprises is taking. It’s important for our founder to reach as many people as we can,” Singh said.
The share price of AEL rose to a lifetime high of ₹4,189 in December 2022 from around ₹500 in January 2021.
The price band of the FPO is set at ₹3,112-3,276 apiece, which is at a discount to Thursday’s market price of ₹3,446. The FPO is part of Adani Group’s deleveraging plan. As of March 2022, the group had a total gross debt of ₹1.88-lakh crore.
The grey market is offering ₹70 as a premium to the FPO, sources said.
FPO for infrastructure
The FPO is “purely an action to facilitate the emergence of infrastructure and energy companies from Adani Enterprises”, he said. “Our fundraising today is a part of the 2015-16 capital management plan. Today, it is public markets; prior to this, fundraising was from strategic investors.”
Singh said the company raises capital based on business requirements. “Decisions can’t be taken based on short-term volatility aspects. We are not trying to maximise each market situation. Since 2015-16, we have raised capital based on business needs. We aim for long-term capital creation,” he said.
“Our obligation remains to our society because this is where we make our significant wealth. No investor should expect us to abandon the core interest of the society. We can be as good as India is.” Singh mentioned that “some mutual funds have missed the wealth creation of Adani firms”.