~20K-cr Adani FPO to be fourth biggest fundraise by India Inc
RIL’S rights issue in 2020 for ~53,124 cr remains the single-biggest equity issuance by an Indian firm
Adani Enterprises’ proposed ~20,000-crore fundraising via fresh issue of equity shares through a public offer would be the fourth biggest by Indian companies, excluding banks and non-banking financial companies.
Reliance Industries’ (RIL’S) rights issue in April 2020 when the company raised ~53,124 crore remains the single-biggest equity issuance by the corporate sector in India. It is followed by Bharti Airtel's right issue in February 2019, when the company raised fresh equity capital worth ~25,000 crore. Its industry peer Vodafone Idea also raised ~25,000 crore in January 2019 through a rights issue.
RIL also raised nearly ~1.5 trillion in FY21 by selling a minority stake in its tech and e-commerce arm Jio Platform to global tech firms, such as Meta and Google, and other international investors.
Other corporations that went for large equity fundraising through fresh issues of shares include food delivery major Zomato. It raised a little over ~10,000 crore via an initial public offering (IPO) in July 2021, according to Capitaline Corporate database. The list also includes the IPO by One97 Communications (Paytm) in November last year when it raised ~9,053 crore via fresh equity sale. Paytm raised a total of ~18,300 crore via its IPO but more than the half of the issue was a share sale by its existing shareholders and investors.
Other conglomerates with big equity issuances in the past 10 years include Tata Steel — which raised ~7,925 crore through a rights issue in 2017 — and Tata Motors, which had a rights issue worth around ~6,800 crore in 2015.
Bharti Airtel tops the charts in terms of overall equity fundraising. The telecom major cumulatively raised around ~57,400 crore through rights issues and QIPS in the past five years, followed by RIL.
The analysis is based on primary and second equity issuances by all the listed companies in the past 10 years but only includes those offers where the company raised fresh equity capital by issuing new equity shares to investors. Business Standard data excludes public issues where existing shareholders or promoters exited the company or raised capital by selling part of their stake in an IPOS or follow-on offer (FPO). This excludes IPOS and FPOS by public sector companies as part of the central government divestment programme. The analysis also excludes large open offers where existing promoters raised stakes in their companies, such as Unilever’s open offer for its Indian subsidiary Hindustan Unilever worth ~25,400 crore in March 2018.
The proposed equity issuance by Adani Enterprises is worth less than 5 per cent of its current market capitalisation of ~4.45 trillion and will dilute its equity base and earnings per share by 5-6 per cent at best. This, according to analysts, would not have any major negative impact on its share price.
Large equity issuances and the resulting dilution generally result in a decline in share price.