BENGALURU, Jan 31 (Reuters) - Gautam Adani's $2.5
billion share sale was fully subscribed on Tuesday as investors
pumped funds into his flagship Adani Enterprises Ltd despite a scathing report by a short-seller that pummelled
stocks in the Indian billionaire's group.
The follow-on public offering (FPO) is critical for Adani,
not just because it will help cut the group's debt, but because
its success will be seen as a mark of investor confidence as he
faces one of his biggest business and reputational challenges.
COMMENTARY
AMBAREESH BALIGA, INDEPENDENT MARKET ANALYST, MUMBAI
"The FPO did get subscribed, thanks to a few institutional
as well as large family offices. The purpose of the FPO was two
fold — to raise funds to reduce debt and to broadbase the
shareholding. Though they managed to pull through raising funds,
they haven't been able to broaden the shareholding as the FPO
equity would be in the hands of a few shareholders.
"The Hindenburg report has taken a toll on sentiment,
especially at the retail level ... and the successful closure of
the FPO may not be able to mend the damage anytime soon. Despite
the rebuttal of the Hindenburg report, it would be difficult to
expect investors to forget this episode in a hurry."
DEEPAK JASANI, HEAD OF RETAIL RESEARCH, HDFC SECURITIES,
MUMBAI
"For Indian markets, one of the concern areas is out of the
way for the time being as this was weighing on investor
sentiment. Some wealthy people and institutions have put in good
amounts based on expectations they have on the company. Since
the current market price is below the offer price, the retail
subscription was low as investors can rather buy it from the
market."
VINIT BOLINJKAR, HEAD OF RESEARCH, VENTURA SECURITIES,
MUMBAI
"The fact that the FPO has got fully subscribed reinforces
the faith of institutional buyers. We believe that the
successful completion of the FPO means that retail participation
will return once the sanity prevails around the volatility in
the stock.
"The FPO is a step in the right direction, given the fact
that interest rates are expected to move up and infusing equity
into the business will help fund part of the growth as well as
repay some part of the debt which has been the equity stroke
capital raising plans of the company."
IPEK OZKARDESKAYA, SENIOR MARKET ANALYST, SWISSQUOTE BANK,
SWITZERLAND
"News that Abu Dhabi International is backing Adani by
investing $400 million is the trigger of the jump we see in FPO.
Adani had lost near $70 billion in market value since the
allegations were out, so it looks like the latest news from Abu
Dhabi International helped investors give Adani the benefit of
the doubt."
SAURABH JAIN, ASSISTANT VICE-PRESIDENT, RESEARCH, SMC
GLOBAL SECURITIES, NEW DELHI
"With the issue getting subscribed, I feel that it only
shows that investors repose their faith and confidence in the
Adani Group and that they do believe in its growth story. With
the money coming in, the company will continue to be on a growth
path, with the concerns left behind."
ARUN KEJRIWAL, FOUNDER OF KEJRIWAL RESEARCH AND INVESTMENT
SERVICES, MUMBAI
"The subscription happening within the three-day period, in
the backdrop of Hindenburg's report, is quite noteworthy. The
only tinge of disappointment is that retail subscription did not
come through. That was their focus area considering the fact
that there was a difference between the market price and the
floor price of the FPO. It seems that retail investors did not
consider the fact that there is more to rates than just the
price."
LEONARD LAW, SENIOR CREDIT ANALYST, LUCROR ANALYTICS,
SINGAPORE
"Investors would view the successful completion of the FPO
as a welcome relief as it implies that the company still has the
support of institutional investors. The FPO would help to
enlarge Adani Enterprises' public float (thereby partly
addressing the issue over the promoters' concentrated
shareholding), as well as reduce leverage for the company and
improve investor sentiment for the wider group.
"That said, it would be helpful to know the identities of
the subscribers, given concerns over investments by offshore
shell companies."
RUCHIT JAIN, LEAD RESEARCH ANALYST AT 5PAISA.COM, MUMBAI
"It seems good that the fear which was overdone is finally
settled. This should bring confidence back in the Adani group
stocks and broader markets too."
(Reporting by Nallur Sethuraman, Bansari Mayur Kamdar, Ankika
Biswas and Rama Venkat in Bangalore, and Anshuman Daga in
Singapore; Editing by Savio D'Souza)
Messaging: nallur.sethuraman.thomsonreuters.com@reuters.net))
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