Public offering was slightly oversubscribed after a U.S. short seller took aim at the Indian conglomerate
The flagship company of India’s Adani Group collected enough investor bids Tuesday to pull off a large stock sale, advancing its fundraising plans in the face of fraud allegations from a U.S. short seller.
By Tuesday afternoon in India, a public share offering by Adani Enterprises Ltd. was slightly oversubscribed—indicating that the Mumbai-listed company would be able to complete the deal, which aimed to raise up to $2.5 billion.
The share sale had been in the works before New York-based Hindenburg Research released a scathing report last week targeting the giant energy and infrastructure conglomerate controlled by Gautam Adani, one of the world’s wealthiest individuals. Since then, Adani Group and the short seller have traded barbs while the shares of seven listed companies bearing the Adani name have collectively lost the equivalent of $64 billion in market value
Some Adani companies’ shares fell for a fourth trading day Tuesday while others rose slightly. Early in the day, India’s two largest stock exchanges adjusted their daily trading ranges for three Adani-linked companies, limiting their maximum change in either direction to 10%, from 20% previously.
The shares of Adani Total Gas Ltd., one of the three firms whose shares were subject to the narrower trading band, fell by the maximum allowable limit of 10% Tuesday. The other two companies, Adani Green Energy Ltd. and Adani Transmission Ltd., chalked up low-single-digit percentage gains.
Shares of Adani Enterprises, the company pursuing the follow-on stock sale, also rose, to levels slightly below the base price of the offering. Its shares have soared over the last few years, taking their historical price-to-earnings multiple to more than 400 times.
Adani Enterprises had earlier secured around $734 million in purchase commitments for the deal from more than 30 anchor investors. They included various international securities firms, the Abu Dhabi Investment Authority and state-backed behemoth Life Insurance Corporation of India. On Monday, an Abu Dhabi-based conglomerate, International Holding Co., said it would buy $400 million worth of shares in the offering in a public show of support for the group.
Most of the bids for the rest of the offering came from large investors, including companies. Many trickled in during the last few hours of the offering. The retail-investor portion of the deal was only 12% subscribed.
The company is scheduled to price the deal Wednesday, according to its regulatory filings. It plans to use some of the proceeds to fund capital expenditures for green-energy projects, expressway construction and airport improvements. It also intends to repay some debt.
Adani Enterprises’ sprawling business portfolio includes green hydrogen, data centers, mining, defense and airport development.
Hindenburg Research has made bearish bets against the Adani companies through their U.S. dollar bonds and derivatives that aren’t traded in India. The group’s dollar bonds have dropped in price since the short-seller’s report came out. They recovered some losses Tuesday, according to Tradeweb data.
The short seller has alleged that Adani manipulated prices of its shares over the years through various offshore shell companies. The conglomerate has disputed the allegations in a lengthy response and characterized Hindenburg’s move as an attack on India.
The selloff following Hindenburg’s allegations has eroded Mr. Adani’s net worth. The 60-year-old was once the world’s second-richest person but is now ranked 11th at $84.4 billion as of Tuesday, according to the Bloomberg Billionaires Index.