Crucial sale of Adani shares 85% subscribed as institutions inject funds

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

The secondary sale of shares in flagship Adani Enterprises (ADEL.NS) was 85% subscribed on Tuesday, including the lead investor’s share, according to data from the Indian exchange. The sale of shares requires at least 90% subscription to be concluded.

As of Monday, the book-building process for the nation’s largest stock sale had only received 3% bids.

Adani Group shares fell after US firm Hindenburg Research’s January 24 report flagged concerns about high debt levels and the use of tax havens, with cumulative losses of $65 billion. Adani called the report baseless.

The share sale is key for Adani, not only because it is India’s biggest follow-on offering and will help reduce debt, but also because its success will be seen as a boost to confidence. by investors at a time when the tycoon is facing one of his biggest business and reputational challenges in recent times.

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The group had in recent days repeatedly said investors stood by it and the share offering would go through, amid growing concerns that it might not happen. Bankers had at one point considered changing the issue’s price or extending the sale, Reuters reported.

Adani’s share sell support came even as shares of the flagship traded at 3,002 rupees, up almost 4% but below the lower end of the sell price range. shares of 3,112 rupees.

“It looks like there are only a few hours left on the last day, but the supply should materialize. Institutions seem to be underwriting to capitalize on the opportunity to buy wholesale outside the open market,” said Dipan Mehta, founder. director of Elixir Equities.

Over the weekend and into Monday, Adani’s company had 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 subdued, garnering bids for only around 9% of the stocks offered for this segment. On Tuesday, demand came from overseas institutional investors, as well as companies that offered more than one million rupees each, according to the data.

Abu Dhabi International Holding Company (IHC.AD) conglomerate said it would invest $400 million in the show.

“The follow-on public offering must be done to restore investor confidence,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

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

Global index publisher FTSE Russell said on Tuesday it continued to monitor publicly available information about the group, particularly from Indian regulators.

Hindenburg said in his report that he had shorted US bonds and India-traded derivatives from the Adani Group. On Tuesday, US dollar-denominated bonds issued by Adani ports and the special economic zone continued their slide in a second week.

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

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