MUMBAI, India (Reuters) – Adani Enterprises’ $2.5 billion share sale remained on track at the planned issue price, the firm told Reuters on Saturday, but sources said lenders were mulling modifications due to a market rout in the group’s shares.
Following a tip from a U.S. short seller, bankers on the deal were considering extending the sale or lowering the issue price, three people familiar with the matter told Reuters on Saturday.
“There is no change in either the timeline or the issue price,” Adani Group stated in a statement.
“All of our stakeholders, including bankers and investors, have complete confidence in the FPO (Follow on Public Offer). We are extremely optimistic about the FPO’s success “It stated.
Seven listed firms in the conglomerate controlled by one of the world’s richest men, Gautam Adani, have lost a total of $48 billion in market value since Hindenburg Research raised worries about their debt levels and usage of tax havens on Tuesday.
The Adani Group has dismissed the claim and stated that it is exploring legal action against Hindenburg.
According to sources, one of the options the bankers were discussing was extending the Tuesday subscription closing date by four days.
The group’s flagship Adani Enterprises fell 20% on Friday, taking it 11% below the secondary sale’s minimum offer price.
On the first day of retail bidding on Friday, the issue received approximately 1% of its targeted number of subscribers, raising worries about its ability to proceed.
According to stock market data, investors, largely retail, bid for approximately 470,160 of the 45.5 million shares on offer.
“Everyone was taken aback. They had not anticipated such a negative response “According to one source.
According to the sources, the other alternative being discussed by lenders is cutting the price, which may be reduced by up to 10%.
Adani had set a floor price of 3,112 rupees ($38.22) per share and a maximum of 3,276 rupees – both of which were much higher than the stock’s Friday close of 2,761.45 rupees.
According to the sources, a decision was expected on Monday.
“Technically, a price range revision or time extension of a public issue can be conducted with a newspaper advertisement and releasing an addendum,” said Sumit Agrawal, managing partner at Regstreet Law Advisors and a former official of India’s capital markets regulator.
Jefferies, India’s SBI Capital Markets, and ICICI Securities, among others, are handling the transaction. They did not reply immediately to requests for comment.
The Hindenburg study raised concerns about the Adani Group’s use of businesses in tax havens such as Mauritius and the Caribbean islands.
It stated key listed Adani companies had “significant debt”, which put the entire group on a “precarious financial footing”.