Adani Enterprises to raise up to ₹20,000 cr through FPO

The company will seek approval of the shareholders for the fundraising by way of postal ballot process, the company said in a filing with stock exchanges.

Promoters currently hold 72.63% shares of Adani Enterprises. Of the remaining, almost 20% is held by insurance companies and foreign portfolio investors.

If Adani manages to raise ₹20,000 crore, it will make the share sale the biggest FPO till date. Yes Bank’s July 2020 FPO worth ₹15,000 crore holds that record currently.

Mint had reported on 24 November, citing multiple unnamed sources, that FPO proceeds will be used to fund Adani group’s foray into green and digital businesses and will provide a bulk of the equity required for its expansion plans for the next three to five years.

In September, Adani, India’s richest person and the second richest in Asia, had said that his group would invest $100 billion over the next decade, primarily in energy transition and digital opportunities, as well as sectors such as aerospace and defence, metals and petrochemicals.

Of this proposed investment, 70% is earmarked for energy transition space. “It is our commitment to investing $70 billion in an integrated hydrogen-based value chain,” Adani had said.

“Adani Enterprises, the incubator in the conglomerate has blue-printed a 3-5 year plan for fund raising. The current fund raising plan will take care of 80-90% of its equity funding requirements for the said period,” an Adani executive told Mint earlier. He did not want to be named.

According to the executive, Adani group businesses generate a consolidated Ebitda (earnings before interest, taxes, depreciation, and amortization) of about ₹30,000 crore, of which ₹13,000 crore is used to service the group’s debt. Funding growth takes up the rest of the amount of ₹17,000 crore, he said.

In its role as an incubator, Adani Enterprises will over time spin off companies such as airports, data centers, green hydrogen, and road projects. According to the Adani executive, each of these companies generate free cash flow.

The Adani group in recent times has been holding road shows in top Indian metros explaining to Indian investors its businesses. The healthcare vertical for now is “not for profit,” enterprise.

This quarter, the group’s airport business turned cash flow positive. Adani Airports won the mandate to modernise and operate six airports – Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram – through the Airports Authority of India’s tendering process. In addition to this ,they own and operate the Mumbai airport.

Fundraising through an FPO allows Adani Enterprises to onboard a wider set of investors thereby increasing the float and liquidity of the stock which could lead to better price discovery in the market.

The FPO plan is also in line with the group’s recent efforts to diversify its sources of funding. Mint reported on 7 November that Adani Enterprises plans to raise as much as ₹2,000 crore through a maiden retail bond sale by December.

Investment banks ICICI Securities and Jefferies have started work on the offer document for the follow-on public offering and more banks will be on-boarded closer to filing of the document.

On Friday, shares of Adani Enterprises on the BSE closed at ₹3,903.35 apiece, down 0.48% from previous close.