Adani to raise $3.5 bn from share sale in three group cos

Billionaire Gautam Adani's conglomerate is looking to raise about USD 3 billion through an equity share sale to institutional investors in the boldest comeback strategy after the ports-to-energy group was hit by a damning report of a US short seller.

While boards of Adani Enterprises Ltd - the group's flagship firm - and electricity transmission company Adani Transmission Ltd have already approved raising up to Rs 21,000 crore (over USD 2.5 billion) through share sales to qualified institutional investors, the board of Adani Green Energy Ltd is likely to do so for raising up to USD 1 billion in the next couple of weeks, sources aware of the matter said.

Post-board approvals, Adani Enterprises Ltd and Adani Transmission Ltd have sought shareholder approval.

Adani Green Energy Ltd's board may meet in the first or second week of June for approving the fundraising, they said.

The entire fundraising of USD 3.5 billion, which would go to fund the capital expenditure needs of the group, is likely to be completed within the second quarter (July-September) of the current fiscal.

The fundraising will be through the issue of shares to qualified institutional buyers. The sources aware of the matter said investors in Europe and the Middle East have evinced strong interest.

Some of the existing investors are likely to subscribe to the offer and some new investors may also join in, according to the sources.

GQG Partners, which invested USD 1.87 billion in four Adani group companies in the first week of March, too may join, demonstrating the investor's continued interest in the conglomerate.

The sources said investors continue to believe in the Adani growth story and have evinced interest in putting in more money in the group.

The fundraising was finalised after extensive roadshows abroad with a range of financial institutions and other investors.

This comes three months after Adani Enterprises was forced to abort a Rs 20,000 crore follow-on public offering (FPO) in the wake of the Hindenburg report.

The offer was fully subscribed but the company returned the money to subscribers. The sources said the company stock, which was offered in the price range of Rs 3,112 to Rs 3,276 in the FPO, is now available at Rs 2,494.25 (at Wednesday's closing price).

US short-seller Hindenburg Research in January released a damning report alleging accounting fraud and stock price manipulation at Adani Group, triggering a stock market rout that had erased about USD 145 billion in the conglomerate's market value at its lowest point.

Adani Group has denied all allegations by Hindenburg and is plotting a comeback strategy. The group has recast its ambitions as well as prepaid some loans to assuage investors.

Promoters in March sold stakes worth Rs 15,446 crore in four group companies to leading US-based global equity investment boutique GQG Partners.

The group has been trying to win back market confidence with a series of investor roadshows, early debt repayments and plans to scale back its pace of spending on new projects.

The funds that Adani Group is looking to raise will be the conglomerate's biggest borrowing since the January 24 Hindenburg report. The money raised is intended to be used for funding the group's expansion projects.