Indian multibillionaire Gautam Adani’s flagship conglomerate launched the country’s biggest-ever secondary share sale on Thursday, as it seeks to bolster its balance sheet and broaden its shareholder base.
Adani Enterprises will offer investors 200 billion rupees’ ($2.5 billion) worth of new shares at a discount, as it looks to lower its ballooning debt and further fuel expansion.
It comes after the company’s share price soared by over 1,000 percent in little more than two years.
Adani, 60, is the world’s third-richest person, with an estimated net worth of $126 billion and interests ranging from Australian coal mines to India’s busiest ports.
He currently owns 73 percent of Adani Enterprises.
The pricing implies a discount of nine to 13 percent off Adani Enterprises’ closing share price of 3,595.35 rupees on Wednesday, according to a prospectus filed with stock exchanges, with retail investors offered an extra two percent off.
Unusually, applicants will only have to pay 50 percent upfront, with the rest due in instalments.
“This allows us to further increase the participation of the average, normal Indian mom and dad as shareholders in Adani Enterprises,” chief financial officer Jugeshinder Singh told a media briefing.
“It is one of the overarching goals of our founder, it is very important for him that the ability to create wealth reaches the remotest corner of India.”
But the shares fell four percent on the Bombay Stock Exchange Thursday, and market analyst Arun Kejriwal said the company needed a “Plan B” if the quote dropped below the offer price.
“They want the retail investor to join the bandwagon. The idea is good but they’ll need at least five million applicants to get the retail portion subscribed,” Kejriwal said.
“If something takes the price down, they need to be prepared with Plan B.”
Roughly 109 billion rupees — 54 percent — of the amount raised will be used to fund capital expenditure of Adani group subsidiaries including road, airport and green hydrogen projects, the company said.
Another 41.65 billion rupees is earmarked to repay corporate borrowings.
Adani Enterprises’ net debt stood at 295.7 billion rupees at the end of September, financial disclosures show.
“The concerns have always been the group’s debt and that the shares are thinly traded,” Kejriwal told AFP, adding that the sale would improve both metrics.
The public offer opens next Friday and will close on January 31.
© Agence France-Presse