The Rs 20,000 crore Adani Enterprises follow-on public offer (FPO) got 6 per cent subscription on Day 3 so far. The issue attracted bids for 27,69,992 shares against the total offer size of 4,55,06,791 shares, as of 10.15 am. The quota reserved for non-institutional investors was subscribed 17 per cent. The employee quota attracted 16 per cent bids while the retail quota received 5 per cent bids.
The issue received a tepid response so far amid a plunge in Adani group shares. While Adani Enterprises has recovered for the second straight day, it is still trading below the FPO price band of Rs 3,112-3,276 per share. The issue is scheduled to close today. The Adani group is expecting institutions and strategic investors to help getting the FPO sail through.
On Monday, Abu Dhabi's IHC said it will invest $400 million (Rs 3,200 crore) in the Adani Enterprises' FPO through its subsidiary Green Transmission Investment Holding. IHC said it will subscribe to 16 per cent of Adani Enterprises' $2.5 billion FPO. Shares of Adani Enterprises gained 5.26 per cent to hit a high of Rs 3,030.
The issue will be deemed successful if it gets at least 90 per cent subscription. Analysts said institutional demand can give the Adani group breathing room for adjusting oversubscription against the undersubscriptions in retail and non-institutional investor categories.
The FPO committee is scheduled to meet on February 1 for the approval of offer price and prospectus in relation to the offer.
"The maximum period for which an FPO can be kept open is 10 working days. But, availing this option can lead to more damage at this stage instead of protecting the shareholder value. One alternative that the Adani group can look at is that the offer can be underwritten to the extent of shortfall in the subscription, which will ensure that the FPO sails through. However, there are conditions imposed by Sebi for underwriting an FPO through book building process," Sameer Raina, Principal Associate at Pioneer Legal said.
Adani Enterprises in a filing to BSE said in the event of offer price being lower than anchor investor allocation price, the difference will not be funded to anchor investors. Group CFO Jugeshinder Singh told BT TV that while retail investors are sensitive to share price, long-term institutional, long-term strategic investors do not see any change in the value of Adani Enterprises post the recent fall.
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