May 28th 2024.
In a recent announcement, Adani Enterprises Ltd, the leading company of Gautam Adani's conglomerate, has shared its plans to raise a staggering amount of Rs 16,600 crore through a share sale. This comes just a day after another subsidiary, Adani Energy Solutions Ltd, received approval for a similar fundraising of up to Rs 12,500 crore through qualified institutional placement (QIP) or other permissible methods.
According to a filing with the stock exchange, the funds may be raised in one or multiple tranches. However, both companies will require further approvals from their respective shareholders. Adani Enterprises Ltd has already scheduled a shareholder meeting on June 24 to discuss and approve the fund raise, while Adani Energy Solutions Ltd's annual general meeting is set for the following day.
It is worth noting that both companies had previously obtained similar approvals in 2023. However, those approvals were set to expire in June, thus necessitating a fresh nod. In fact, in May 2023, the board of Adani Enterprises had approved a fundraise of Rs 12,500 crore through QIPs, while Adani Energy Solutions Ltd had received a board nod for raising Rs 8,500 crore through QIP.
A QIP is essentially a way for listed companies to raise capital without having to go through the lengthy process of submitting legal paperwork to market regulators. By raising funds from institutions such as banks and private equity funds, the two companies hope to expand their shareholder base and increase their global presence. This, in turn, would also result in a decrease in the Adani family's stake in the post-equity capital of the companies. Currently, the Adani family holds a majority stake of 72.61% in Adani Enterprises Ltd and 73.22% in Adani Energy Solutions Ltd.
Despite obtaining the board approvals for fundraising, the two companies had not gone ahead with it previously. These approvals are essentially enabling resolutions, allowing the companies to act swiftly whenever they find the best financing terms. However, it is not mandatory for them to raise the funds immediately.
In the wake of a damaging report by US short seller Hindenburg Research last year, the Adani group has significantly increased its capital spending. As a result, the group's stocks saw a significant drop in market value of about USD 150 billion. However, they have since recovered, with four of the ten listed Adani firms reaching their pre-Hindenburg levels. This has also led to the tycoon Gautam Adani's net worth surging by USD 25 billion this year, making him the 13th richest person in the world, just one rank below Mukesh Ambani, who is worth USD 114 billion.
The group's strategy to bounce back, which included reducing debt and slowing down the pace of expansion, has also seen them raise around Rs 45,000 crore from prominent investors such as Qatar Investment Authority, Abu Dhabi-based IHC, French giant TotalEnergies, and US-based GQG Investment.
In its filing with the stock exchange, Adani Enterprises Ltd, which has interests in various sectors such as airports and data centres, has stated that its board has approved raising funds through the issuance of equity shares or other eligible securities, or a combination of both. The aggregate amount is not to exceed Rs 16,600 crore or an equivalent amount through QIP or other permissible modes in one or more tranches. However, the company has not disclosed the specific use of the funds.
It is worth mentioning that in February last year, Adani Enterprises had to cancel a follow-on share sale that had raised Rs 20,000 crore, as the group's stock plummeted following Hindenburg's accusations of accounting fraud, stock manipulation, and improper use of tax havens. The Adani group has vehemently denied all allegations.
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