Adani’s crucial share sale 85% subscribed as institutions pump in funds

MUMBAI, Jan 31 (Reuters) – Indian billionaire Gautam Adani’s $2.5 billion share sale inched closer to full subscription on Tuesday as investors pumped in funds after a tumultuous week for his group in which its stocks were pummeled by a scathing short-seller report.

The secondary share sale of flagship Adani Enterprises was subscribed 85% on Tuesday, including the anchor investor portion, Indian stock exchange data showed. The share sale needs at least 90% subscription to go through.

By Monday, the book building process of the country’s largest share sale had received only 3% in bids.

Adani group’s stocks have tumbled after the Jan. 24 report from U.S.-based Hindenburg Research which flagged concerns about high debt levels and the use of tax havens, with cumulative losses now at $65 billion. Adani has called the report baseless.

The share sale is critical for Adani, not just because it is India’s largest follow-on offering and will help cut debt, but also because its success will be seen as a stamp of confidence by investors at a time the tycoon faces one of his biggest business and reputational challenges of recent times.

The group had in recent days repeatedly said investors were standing by its side and the share offering would go through, amid rising concerns that may not happen. Bankers at one point had considered tweaking the pricing of the issue, or extending the sale, Reuters had reported.

The support for Adani’s share sale came even as the flagship’s shares were trading at 3,002 rupees, up nearly 4% but below the lower end of the share sale price band of 3,112 rupees.

“It looks down to the wire with just a few hours remaining on the last day, but the offering should go through. Institutions seem to be subscribing to capitalise on opportunity to buy in bulk quantities outside the open market,” said Dipan Mehta, founder director of Elixir Equities.

Over the weekend and through Monday, Adani’s firm held extensive discussions with investment bankers and institutional investors to attract subscriptions, according to two sources with direct knowledge of the talks.

Demand from retail investors remained muted, garnering bids only worth around 9% of the shares on offer for that segment. On Tuesday, demand came from foreign institutional investors, as well as corporates who bid in excess of 1 million rupees each, data showed.

Abu Dhabi conglomerate International Holding Company has said it will invest $400 million in the issue.

“The follow-on public offering has to go through to restore investor confidence,” said V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The Hindenburg report and its fallout have drawn global attention. Adani is now the world’s eighth richest person, down from third ranking on Forbes’ rich list last week.

Global index publisher FTSE Russell said on Tuesday it continues to monitor publicly available information on the group, in particular from the Indian regulatory authorities.

Hindenburg said in its report it has shorted U.S.-bonds and non-India traded derivatives of the Adani Group. On Tuesday, U.S. dollar-denominated bonds issued by Adani Ports and Special Economic Zone continued their fall into a second week.

Reporting by M. Sriram and Chris Thomas; Editing by Aditya Kalra and Muralikumar Anantharaman

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