Adani Enterprises To Raise $2 Billion Through Share Sale

The fundraising for both companies may occur in one or more tranches, as stated in a stock exchange filing by Adani Enterprises

Adani Enterprises Ltd, the flagship firm of billionaire Gautam Adani's conglomerate, announced on Tuesday that its board has approved a plan to raise up to Rs 16,600 crore (nearly $2 billion) through a share sale. This decision follows a similar approval granted to the group's power utility, Adani Energy Solutions Ltd, which plans to raise up to Rs 12,500 crore via qualified institutional placement (QIP) or other permissible methods.

The fundraising for both companies may occur in one or more tranches, as stated in a stock exchange filing by Adani Enterprises. The companies will also require additional approvals, including those from shareholders. Adani Enterprises has scheduled a shareholder meeting on June 24 to seek approval for the fundraise, while Adani Energy Solutions will hold its annual general meeting (AGM) on June 25 for the same purpose.

These new approvals come as the previous ones granted in 2023 were set to expire in June. In May 2023, Adani Enterprises had approved a fundraise of Rs 12,500 crore through QIPs, and Adani Energy Solutions had secured a board nod to raise Rs 8,500 crore via QIPs. A QIP is a method for listed companies to raise capital without submitting extensive legal paperwork to market regulators.

Raising funds from institutions such as banks and private equity funds will diversify the shareholder base of the two companies, addressing one of the main criticisms against the Adani Group. It will also enhance their global presence. However, this will result in a decrease in the promoter Adani family's stake in the post-equity capital of the companies. Currently, the Adani family holds 72.61 per cent in Adani Enterprises and 73.22 per cent in Adani Energy Solutions Ltd.

Despite securing board approvals in 2023, the companies did not proceed with fundraise. Such board approvals are enabling resolutions that allow companies to act swiftly when optimal financing terms are available, though they are not obligated to raise the funds.

Adani Group has ramped up capital spending as it recovers from the impact of a damaging report by US short-seller Hindenburg Research last year. At its lowest point, the group's stocks lost about $150 billion in market value but have since rebounded. Four of the 10 listed Adani firms have regained their pre-Hindenburg levels, and Gautam Adani's net worth has surged by $25 billion this year, reaching over $109 billion. He is now ranked 13th globally, just below Mukesh Ambani, who is worth $114 billion.

As part of its recovery strategy, the group has focused on reducing debt and slowing its rapid expansion. It has also raised nearly Rs 45,000 crore from prominent investors, including the Qatar Investment Authority, Abu Dhabi-based IHC, French giant TotalEnergies, and US-based GQG Investment.

In its stock exchange filing, Adani Enterprises, which operates businesses ranging from airports to data centers, stated that its board "approved raising of funds by way of issuance of such number of equity shares having face value of Re 1 each of the company and/or other eligible securities or any combination thereof, for an aggregate amount not exceeding Rs 16,600 crore or an equivalent amount thereof by way of QIP or other permissible mode in one or more tranches." The company did not disclose the intended use of the funds.

In February last year, Adani Enterprises had called off a follow-on share sale through which it had raised Rs 20,000 crore, following a sharp decline in the group's stock prices after Hindenburg accused the group of accounting fraud, stock manipulation, and improper use of tax havens. Adani Group has denied all allegations.