Gautam Adani pulls off $2.4bn share sale despite short seller report
Indian billionaire Gautam Adani succeeded in his $2.4 billion share sale, securing bids for more than 92 percent of the shares on offer, despite a short-seller report targeting his industrial empire.
The share sale was initially intended to broaden the shareholder base of Adani Enterprises, of which Adani owns a roughly three-quarter stake. The stock has come under criticism for its low trading liquidity.
But after short-seller Hindenburg Research released a report last week alleging Adani Group, the parent company of Adani Enterprises, was involved in stock manipulation and accounting fraud, the success of the sale became a test of investor faith in the group.
For the share sale to be a success, it had to place more than 90 percent of the offer. As of 2:54 PM in India, the follow-on share offer by Adani Enterprises has received bids for about 41 million shares of the total 45.5 million being sold to the public.
Another 18.3 million was allocated to anchor investors, including London-listed Jupiter Asset Management, BNP Paribas, Société Générale and Goldman Sachs.
At least 90 percent of the total shares offered must be sold by the end of the day to successfully close the deal. In India, most bids typically come at the end of a stock sale.
Shares in Adani Enterprises rose about 2.5 percent to Rs2964 ($36.15) on Tuesday. That was still less than the price floor of Rs3,112 the company had set for the offer and was down nearly 15 percent from the stock’s close on January 24 before Hindenburg released its report.
Hindenburg said that Adani Group, whose holdings span a swathe of the Indian economy from ports to data centers, used offshore entities in tax havens to artificially inflate the share prices of its listed companies, allowing them to take on more debt. to go and “the entire group on a shaky financial footing”. The report triggered a nearly $70 billion wipeout of Adani Group shares.
Adani dismissed the allegations as unfounded and threatened legal action against Hindenburg. His group published its own rebuttal on Sunday, calling Hindenburg an “unethical short seller” and the report “a calculated attack on India”.
The partial recovery in the shares of some Adani Group subsidiaries came after Abu Dhabi-based conglomerate International Holding Company said on Monday it would invest $400 million in the share sale, representing about 16 percent of the total offering. . It is not yet clear how much of this stake the company has already taken.
Adani Enterprises bought full-page advertisements and public announcements about the share sale in various national Indian newspapers published on Tuesday.
Hindenburg’s allegations are a rare challenge from the markets to Adani Group. Its 60-year-old founder and chairman is India’s richest man and hails from Gujarat, the home state of Prime Minister Narendra Modi.
His companies have expanded rapidly, striking infrastructure, energy, clean power and other deals in recent years, along with India’s growing economy.