Two companies in billionaire Gautam Adani’s empire, including his flagship firm, are seeking to raise as much as $2.6 billion, signaling the Indian conglomerate wants to focus on growth after a scathing short seller report forced it into damage control.
Adani Enterprises Ltd., the incubator for new group businesses, has received board approval to raise as much as 125 billion rupees ($1.5 billion) through a Qualified Institutional Placement or other modes, according to an exchange filing Saturday. Adani Transmission Ltd. can do fundraising of up to 85 billion rupees using similar methods, the utility said in a separate filing on the same day.
The latest fundraising plans show that the ports-to-power conglomerate is looking to move past the crisis triggered by Hindenburg Research’s corporate fraud allegations levied at the end of January that has wiped out more than $100 billion from its market value. Despite denying these accusations, the tycoon and his aides had to undertake a slew of measures to assuage investors, including scrapping a $2.4 billion share sale by Adani Enterprises in February.
Shareholder approvals will be sought in due course, both the companies said in their filings. Adani Green Energy Ltd. was also scheduled to hold its board meeting on Saturday but deferred it to May 24, citing “certain exigencies.”
US-based GQG Partners, in early March, bought stakes from the founders in four group companies — Adani Ports and Special Economic Zone Ltd., Adani Green Energy, Adani Transmission and Adani Enterprises — for $1.9 billion, in a big vote of confidence for the conglomerate. GQG’s Rajiv Jain told Bloomberg then that Adani firms have “phenomenal, irreplaceable assets.” In April, the star investor said these stocks could be “multibaggers” over five years.
India’s markets regulator is currently looking into any possible violations as well as unusual market activity in Adani Group stocks in the wake of the short seller attack. The Supreme Court of India is awaiting a report from the regulator, which has requested more time as it collates financial data on the conglomerate locally and overseas. The apex court will be hearing the matter on Monday.
Adani Enterprises, which posted robust latest quarterly earnings, has plunged 49% this year. Adani Transmission, which will be dropped from MSCI’s India index at the end of May, has declined 66% this year. It is yet to announce its earnings.
Meanwhile, Adani Transmission, Adani Green Energy and Adani Total Gas Ltd. will be removed from a local tally of firms designated for the so-called additional surveillance measures, according to a list updated on the websites of the country’s two largest bourses on Friday. Companies on the watchlist face trading restrictions, including margin limits, price band caps, and other curbs meant to protect investors.
--With assistance from Akshay Chinchalkar and Ashutosh Joshi.