In spite of a $65 billion decline in the Indian billionaire’s stocks sparked by a short-seller’s report, Gautam Adani’s $2.5 billion share sale on Tuesday was fully subscribed.
In addition to reducing his group’s debt, Adani’s fundraising is important because it is seen by some as a gauge of confidence at a time when the tycoon faces his biggest business and reputational challenges.
His fortunes have fallen dramatically and suddenly as a result of the subsequent market meltdown, which led to his fall from third in Forbes’ rich list rankings, after Hindenburg Research’s report last week alleged improper use of offshore tax havens and concerns about high debt, which Adani denied.
India’s largest ever secondary share sale attracted investors including Maybank Securities and Abu Dhabi Investment Authority, as well as HDFC Life Insurance and state-backed Life Insurance Corporation (LIFI.NS).
The list of investors who participated in the book building, which had gathered only 3% in bids on Monday amid concerns over the rout in Adani’s stocks, is not yet public.
By Tuesday, the overall share sale was fully subscribed as foreign institutional investors and corporate funds flooded in, although participation by retail investors and Adani Enterprises (ADEL.NS) employees remained low.
“The purpose of the FPO (follow-on public offering) was two fold – to raise funds to reduce the debt and to broadbase the shareholding … they haven’t been able to broadbase the shareholding,” Ambareesh Baliga, a Mumbai-based independent market analyst, said.
Adani Total Gas (ADAG.NS) closed down 10% at its lower price limit, while Adani Power (ADAN.NS) and Adani Wilmar (ADAW.NS) were both down 5%. Hindenburg said it had shorted U.S. bonds and non-Indian traded derivatives of the Adani Group in its report. Bonds issued by Adani Ports and Special Economic Zone fell for a second week on Tuesday.