India’s largest follow-on public offer to raise Rs 20,000 crore is an opportunity for Adani Enterprises Ltd. to diversify its shareholding, said analysts.
The billionaire Gautam Adani-led company will use the proceeds to fund future investments and deleverage its balance sheet.
Promoters currently hold 72.63% stake in Adani Enterprises as on September 2022, according to data available on BSE Ltd.
“The promoters’ holding in the company is significantly on the larger side, upwards of 70%. It is possible for them to dilute that much of equity for sure,” Deven Choksey, group chairman and managing director of KRChoksey Holding, told BQ Prime’s Niraj Shah.
The total equity net worth is around Rs 37,000 crore, according to the last balance sheet numbers, so Rs 20,000 crore out of it is not a big deal, he said.
“The FPO will definitely get through comfortably, because the size of investors looking at India from an investment perspective get the best proxy in form of Adani Enterprises today,” Choksey said.
The proceeds from the offer will largely be deployed towards new generation of business in ventures that Adani Enterprises is incubating, including digital, where a large amount of capital is needed, said Choksey.
According to Choksey, there is a lot of “appetite” in some global funds and they would look forward to the FPO.
“The company already has operating assets. It becomes an attractive proposition for any investor walking in because the cash generation is already there.”
Institutional investors currently hold 13.92% stake in Adani Enterprises, according to Bloomberg data. Of this, notable global investors form a niche. While the company counts Nomura Holdings, Goldman Sachs, UBS and Edelweiss Asset Management among its investors, most have less than 1% shareholding in the company.
“As more and more diverse global investors get in, other investors do get more and more confidence,” said Sudip Bandyopadhyay, group chairman of Inditrade Capital.
In terms of the debt situation of Adani Enterprises, Bandyopadhyay said, “This is a step in the right direction… they need to do much more.”