Adani Group Firms Aim To Raise $2.56 Billion Via QIPs

On 12 May, Mint had first reported that the Adani group was considering a plan to raise as much as $2.5 billion by selling equity shares through qualified institutional placements (QIPs) in group companies, including Adani Enterprises Ltd, Adani Green Energy Ltd and Adani Transmission.

On Saturday, Adani Enterprises and Adani Transmission said they would raise a total of ₹21,000 crore ($2.56 billion) via QIPs.

The boards of the two companies met on Saturday “to take an enabling resolution" to raise the $2.56 billion, and in the coming week, one more Adani Group firm may avail a similar resolution from its board.

In a regulatory filing, Adani Enterprises said its board has approved raising of funds by way of issuance of equity shares or other eligible securities, for an aggregate amount not exceeding Rs12,500 crore by way of QIP.

Adani Transmission, too, said its board has approved capital raising of funds by way of issuance of equity shares worth up to ₹8,500 Crore via QIP route.

Both the companies said the fund raising is subject to shareholders' and regulatory approvals.

The amount being planned to be raised by the group via QIPs is similar to the amount that was planned to be raised by its flagship Adani Enterprises three months ago via a follow-on public offer (FPO), which was called off due to excessive volatility in the flagship's shares following a damning 24 January report on the group by US-based short-seller Hindenburg Research.

At Adani Green, a board meeting on fund raising, which was scheduled for 13 May, has been postponed to 24 May due to certain "exigencies", said the company in an exchange filing.

If Adani Group succeeds to raise funds through equity sales, it may boost the public confidence in the conglomerate and stocks of group companies.

According to the 12 May Mint report, to start with, the group may raise about $1 billion through the issuance of fresh equity shares in Adani Enterprises and Adani Transmission via QIP route.

The proceeds from this will be primarily used to partly fund the group’s $3.8 billion capex planned for FY24. The balance capex will be funded through the issuance of fresh bonds.

The companies are taking the enabling resolution from their boards for the equity fundraising now because once demands or offers start coming in from potential investors (at the right price), the companies should be able to raise the amounts immediately.

A board resolution and shareholder approval are mandatory for QIPs as per norms.

If the board resolutions are not taken in advance, it often unnecessarily delays the fundraising process by over 30 days which, in turn, may again expose the stocks to unwanted market volatility.

The Adani Group, following the 24 January report by Hindenburg Research, lost over $140 billion in market value and was forced to call off its flagship Adani Enterprises’ fundraising on 1 February.

The stake held by the Adani Group in AEL and ATL may be sold mostly to large offshore funds, including asset managers, private equity funds and sovereign wealth funds, according to a person close to the development.

Meanwhile, the Supreme Court on Friday said, it will hear on the ongoing Adani-Hindenburg case on 18 May. The hearing was earlier scheduled for today.

On 2 March, the apex court had asked the markets regulator to probe Hindenburg’s allegations of stock “price manipulation" by the Adani group and lapses in regulatory disclosures within two months. To be sure, Adani group stocks have steadily recovered over the past few weeks, indicating a waning effect of the Hindenburg report.