Adani FPO to fund green and digital biz
Billionaire Gautam Adani’s flagship Adani Enterprises Ltd is planning a follow-on public offering (FPO) to finance the group’s expansion in green and digital businesses, three people aware of the development said. The board of the Adani-led firm will meet on Friday to finalize the fundraising.
Adani may raise ₹10,000-20,000 crore through the FPO, said one of the three people cited above, all of whom spoke on condition of anonymity.
“The fundraising is aimed at two things. One, to mobilize funds for new businesses such as green hydrogen, data centres and renewables; and two, to improve the company’s float on stock exchanges by bringing in a wide set of new investors,” the person said. In September, Adani, the second richest person in the world, said 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, 70% is earmarked for energy transition.
“It is our commitment to invest $70 billion in an integrated hydrogen-based value chain,” Gautam Adani said while laying out his group’s plans.
Adani has mandated investment banks ICICI Securities and Jefferies to prepare the offer document, and more banks, perhaps including SBI Capital, will be on-boarded closer to the filing of the document, the second person said.
“While things are at an early stage, the company is looking at launching the deal before the end of the fiscal if market conditions are conducive. Otherwise, this will get done in Q1 of next fiscal,” he added.
The FPO plan also aligns with the group’s recent efforts to diversify its funding sources. Mint reported on November 7 that Adani Enterprises plans to raise as much as ₹2,000 crore through a maiden retail bond sale by December.
Promoters currently hold 72% of Adani Enterprises, while public shareholding stands at 27.37%.
“An FPO makes more sense to them because they are also looking to improve the float. Compared to FPO, a qualified institutional placement (QIP) or a private placement would mean bringing in large institutional investors who would hold on to the stock for a longer term, while FPO will also bring in a wider set of investors such as high net worth individuals and retail investors into the stock, improving the float and price discovery of the stock,” the first person added. FPOs also allow a free pricing mechanism as compared to QIP or private placement, which have a fixed formula to price the stock based on historical stock prices, he said.
An email sent to an Adani group spokesperson remained unanswered.