The follow-on public offer (FPO) of Adani Enterprises is expected to hit the primary market today amidst a poor performance of the company stocks due to a negative report by American short seller Hindenburg Research. The FPO will remain open for bidding until January 31, 2023, and the company aims to raise Rs 20,000 crore, which will be used for debt repayment and capital expenditure.
More aobut the FPO
The company had fixed the FPO price band at Rs 3,112 to Rs 3,276 per equity share. But today, due to the report by Hindenburg Research the shares of Adani Enterprise were at Rs 2,862.
Before the FPO launch, the company had already raised close to Rs 6,000 crore from close to 30 institutional investors, including international investment funds from the Abu Dhabi Investment Authority, Citigroup Global, Al Mehwar Investments, Morgan Stanley, and Goldman Sachs. The domestic investment came from insurance majors like HDFC Life Insurance and LIC, but the domestic mutual funds kept their distance.
The FPO, a fresh issue of 61,474,751 equity shares on a partly paid basis with a price band of Rs 3,112-3,276 will offer shareholders 35 per cent reservation and a discount of Rs 64 per share.
The company stated that it is raising funds to meet capital expenditure requirements for green hydrogen ecosystem projects, improvement of existing airport facilities, and construction of a greenfield expressway. The amount that will be left over will be used to repay Adani Airport Holdings, Mudra Solar, and Adani Road Transport for general corporate purposes.
Price of the FPO and subscription
The grey market has remained flat in regards to the FPO, but the cost of the FPO dropped from the earlier Rs 100 to Rs 45. Additionally, by 12:18 pm on Friday, the FPO had been subscribed 0.01 times in retail category and 0.02 times in the employee category.
As per the tentative schedule, the FPO is expected to be listed on February 8, 2023.
Should you subscribe to Adani Enterprises FPO?
One could say that the strategic timing of the release of the Hindenburg report on the eve of the FPO indicates that there was some objective to scare investors. Additionally, with Hindenburg being a short seller, it can be considered that there is a motivated view to release the report, which has already impacted the shares of the company and the price of the FPO.
But there is also a possibility that the reports may turn out to be true, which is why the shares of the company have been falling and there is poor response from the investors in the FPO.
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