Adani Enterprises, the flagship company of the Adani Group, has successfully raised $500 million through its qualified institutional placement (QIP). This significant fundraising effort was announced on October 11, 2024, marking a substantial step towards the company's financial goals.
The QIP, which opened on Wednesday, attracted a diverse range of investors including GQG Partners, Quant Mutual Fund, SBI General Insurance, SBI Life Insurance, and HDFC Life Insurance. Additionally, several ultra-high net worth individuals also participated in the share sale.
The indicative floor price for the QIP was set at 2,962 per share. On Thursday, shares of Adani Enterprises closed 0.65% higher at 3,173.30 apiece on the Bombay Stock Exchange (BSE).
Background and Approval
In May 2023, Adani Enterprises secured board approval to raise as much as 16,600 crore through a QIP in one or more tranches. However, the company initially abandoned this plan due to market conditions. The latest fundraising is only a fourth of the approved amount.
This is the first equity fundraising activity for Adani Enterprises since the conglomerate was accused of lapses in corporate governance by US-based short seller Hindenburg in early 2023.
Investor Demand and Allocation
The QIP has garnered strong investor demand, with the qualified institutional placement book closed on October 10. The process will conclude by October 15 after the board meeting. The allocation of shares to investors will be announced following the board meeting on Tuesday.
Marquee investors such as GQG Partners, Quant Mutual Fund, SBI Life Insurance, ICICI Prudential Life Insurance, SBI General Insurance, Whiteoak Capital Mutual Fund, and Tata Mutual Fund have participated in the share placement.
The allocation of shares will be determined by the bookrunning lead managers, which include SBI Capital Markets Ltd., Jefferies India Pvt., and ICICI Securities Ltd. Cantor Fitzgerald & Co. has been appointed as an advisor in connection with the issue.
Future Plans and Utilization of Funds
The funds raised from the proposed QIP are planned to be used for capital expenditure purposes as well as to repay some existing debt of the company and its subsidiaries.
Adani Enterprises acts as an incubator for many of the group's new businesses, including airports, mining, infrastructure, data centers, and green hydrogen ventures.
In addition to this QIP, Adani Enterprises is in advanced discussions with a Middle Eastern sovereign fund to raise $1 billion for its airports business.
Market Performance and Analysts' Views
Shares of Adani Enterprises have risen 27.5% during the last 12 months and advanced by 11.4% year-to-date. Three analysts tracking the company have a 'buy' rating on the stock, according to Bloomberg data.
The average of 12-month analysts' price targets implies a potential upside of 33%, indicating positive sentiment towards the company's future performance.
This successful QIP comes over a year after Adani Enterprises called off its fundraising plans following a scathing short-seller report. The company's ability to attract significant investor interest underscores its resilience and potential for growth.
