NEW DELHI: To fuel ambitious expansion plans, billionaire Gautam Adani’s flagship Adani Enterprises ldt (AEL) is seeking to raise Rs 20,000 via a follow-on public offering (FPO). This will be the country’s largest FPO, beating the July 2020 FPO of YES Bank when it had raised Rs 15,000 crore.
This FPO exercise comes after a rise of over 1,800% in the stock price of Adani Enterprises in the last three years. This also comes at a time when the Ahmedabad-based port-to-power conglomerate as a whole is drawing attention of being overleveraged and highly debt funded. The face value of each share in the FPO would be Rs 1, as per AEL regulatory filing.
A follow-on public offer is a way by which listed entities issue shares to the public to diversify their shareholding. The FPO by Adani Enterprises, last valued at Rs 4.45 lakh crore, will increase its public float as more numbers of shares will be available for trading on exchanges.
The company’s public float was at 27.37% while the promoter holding stood at 72.63% at the end of the September quarter this fiscal. In comparison, rival billionaire Mukesh Ambanai’s Reliance (RIL) had a public float 49.43% while promoter’s shareholding stood at 50.57% as of September end.
Like RIL, which raised over $27 billion in 2020 by selling stake to Facebook (now Meta) and Google’s parent, Alphabet Inc, it is widely reported that Adani is also scouting for big names to fund parts of future projects via stake sale.
The fundraising would improve AEL’s debt ratios, broaden investor base and increase stock liquidity. Headed by Asia richest billionaire Gautam Adani, the Group was recently termed as “deeply overleveraged” by CreditSights. Adani Group’s combined gross debt reached a new high of Rs 2.22 lakh crore at the end of FY21-22, up 42% from Rs 1.57 lakh crore a year ago.
Raising concerns on Adani’s expansion plans, the Fitch Group unit in August had said that in the worst-case scenario, overly ambitious debt-funded growth plans could eventually spiral into a massive debt trap, and possibly culminate into a distressed situation or default of one or more group companies.
