NEW DELHI, Jan 29 (Portal) – Gautam Adani faces a critical day on Monday as the second day of bidding in his flagship company’s $2.5 billion share sale ends.
Seven listed companies owned by the Adani conglomerate, run by Asia’s richest man, fell sharply after Hindenburg Research’s report last week raised concerns about high levels of debt and the use of tax havens.
The Adani Group issued a detailed response late Sunday, saying it is complying with all local laws and has made the necessary regulatory disclosures. It has called the report baseless and said it was considering taking action against Hindenburg.
For Adani, 60, the stock market crisis was a dramatic setback for a high school dropout who in recent years has quickly risen to become the world’s third richest man before slipping to seventh on Forbes’ list last week.
Adani Enterprises (ADEL.NS) secondary stock sale opened to retail and institutional investors on Friday but drew just 1% from subscriptions as the company’s shares fell 11% below the reserve offer price.
Adani Group told Portal in a statement on Saturday that the sale remains on schedule at the planned issue price, although sources said bankers of the country’s largest secondary stock sale are considering extending the schedule beyond Jan. 31 or the price due to optimize the decline in its share price.
“It is important for Adani Group to ensure the share sale goes through – if they stick to the price and don’t lower it and the stock doesn’t recover, no one will be happy to bid,” Mumbai said. Market analyst Ambareesh Baliga, who advises various family offices.
“Monday trading will be crucial.”
In a separate statement on Sunday, Adani Group’s chief financial officer Jugeshinder Singh said it was focused on the stock sale and was confident it would pull through. He also said anchor investors have shown confidence and remain invested.
‘FREEFALL’
Some Adani Group shares are up more than 1,500% over the past three years amid aggressive expansion in companies that include ports, power generation, airports and mining.
Adani Enterprises has set a floor price of Rs.3,112 per share and a cap of Rs.3,276 for the second share sale – well above Friday’s closing price of Rs.2,761.45.
Arun Kejriwal, founder of Kejriwal Research & Investment, said investors would likely wait until the last day of the stock sale to see if the price range will be adjusted.
“I expect Friday’s free fall to subside, but recovering to pre-fall levels could be difficult,” he added.
Indian regulations state that the share offering must receive a minimum subscription of 90% and if this is not the case, the issuer must return the entire amount.
Maybank Securities and Abu Dhabi Investment Authority are among the investors bidding for the anchor portion of the issue.
On Saturday, index provider MSCI said it is gathering feedback on Adani from market participants and is monitoring the factors that “may affect the suitability of these relevant securities” in MSCI indices.
The MSCI India Index contains at least six Adani Group companies with a total weighting of 4.31%.
Reporting by Aditya Kalra, Ira Dugal, Jayshree P Upadhyay and Chris Thomas; Editing by Alexander Smith
Our standards: The Trust Principles.