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India’s Adani says $2.5b share sale on track even as bankers mull changes

Friday’s 20% fall in shares dragged Adani Enterprises 11% below the minimum offer price of the secondary sale

A $2.5 billion share sale by India’s Adani Enterprises remains on schedule at the planned issue price, the company told Reuters on Saturday, while sources said bankers were considering changes due to a market rout in the group’s shares.

Bankers on the deal were considering extending the sale or cutting the issue price after shares of Adani plunged following a report from a US short seller, three people familiar with the matter told Reuters on Saturday.

Adani Group in a statement said: “There is no change in either the schedule or the issue price.”

“All our stakeholders including bankers and investors have full faith in the FPO (Follow on Public Offer). We are extremely confident about the success of the FPO,” it said.

Among the options the bankers are considering are to extend the Tuesday closing date for the subscription of the issue by four days, the sources told Reuters on Saturday.

Seven listed companies of the conglomerate controlled by one of the world’s richest men, Gautam Adani, have lost a combined $48 billion in market value since Hindenburg Research on Tuesday flagged concerns about debt levels and the use of tax havens.

The Adani Group has called the report baseless and said it was considering taking action against Hindenburg.

Friday’s 20 per cent fall in shares of group flagship Adani Enterprises dragged it 11 per cent below the minimum offer price of the secondary sale. On first day of retail bidding on Friday, the issue was subscribed around 1 per cent, raising concerns over whether it would be able to proceed. “Everyone was shocked. They did not expect such a poor response,” one source said.

Adani had set a floor price of Rs3,112 a share and a cap of Rs3,276, but Adani Enterprises closed on Friday Rs2,761.45.

The other option being considered is lowering the price, the sources said, with one saying it could be cut by as much as 10 per cent. A decision was expected on Monday, the sources said.

“Revision in price band or time extension of public issue can technically be undertaken with a newspaper advertisement and issuing an addendum,” said Sumit Agrawal, managing partner at Regstreet Law Advisors and a former officer of the Indian capital markets regulator.

At the end of the first day of the share sale, investors, mostly retail, had bid for around 470,160 of the 45.5 million shares on offer, according to Indian stock exchange data.

The sale is being managed by Jefferies, India’s SBI Capital Markets, and ICICI Securities among others. They did not immediately respond to requests for comment.

A fourth source said Adani management is also discussing the share sale internally to decide on next steps.

The Hindenburg report questioned how the Adani Group used entities in offshore tax havens such as Mauritius and the Caribbean islands. It said key listed Adani companies had “substantial debt”, which put the entire group on a “precarious financial footing”.