FPO | Z+ Insurance

Adani public offer to close today; stock at 7-12% discount

WITH JUST a day for its Rs 20,000 crore follow-on public offer (FPO) to close, Adani Enterprises Ltd, the flagship of the Adani Group, partially recovered Monday to end 4.2 per cent higher at Rs 2,878 a share, but continues to be at a 7-12 per cent discount to the FPO price band of Rs 3,112-3,276 a share.

The Adani Enterprises stock had plunged 18 per cent on Friday, and 1.18 per cent on Wednesday.

The slide in the fortune of Adani Group and its founder Gautam Adani continued Monday as shares of four of the nine listed group companies hit the lower circuit and two others fell. The Sensex, which shed 631 points intra-day, recovered to close with a gain of 169.51 points, or 0.29 per cent, at 59,500.41, and the NSE Nifty Index gained 45 points at 17,648.95.

Besides Adani Enterprises, Ambuja Cements and ACC rose 1.65 per cent and 1.1 per cent, respectively. But the group, as a whole, witnessed an additional decline in its market capitalisation of Rs 1.36 lakh crore taking the aggregate decline in market cap over the last three trading sessions to Rs 5.56 lakh crore.

In line with the decline in fortunes of the group companies at the stock exchange, Gautam Adani too witnessed further decline in his personal wealth as he slipped to 8th spot in the Forbes billionaire list on Monday. His net worth declined by USD 8.1 billion on Monday to USD 88.6 billion.

In a statement, LIC, the state-owned insurer, said it has invested Rs 36,474.78 crore in Adani Group as on date, and its exposure was 0.975 per cent of the total assets under management (AUM) at book value.

The total purchase value of equity, purchased over the last many years, under all the Adani Group companies is Rs 30,127 crore and the market value for the same as on January 27, 2023 was Rs 56,142 crore, it said in a statement. LIC did not disclose the current market value of its equity investment (post meltdown since last Wednesday).

“These investments have, however, been made over a period. The credit rating of all of the Adani debt securities held by LIC are AA and above which is in compliance with the IRDAI investment regulations as applicable to all life insurance companies,” said LIC.

Responding to the Adani Group’s 413-page response to its report on Sunday, Hindenburg Research said, “India’s future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation.” The Adani Group had said Sunday that the Hindenburg report is an “attack on India”.

Shares of Ambuja Cement and ACC were also in the green and it is important to note that they were acquired by Adani only last year.

On the other hand, traditional Adani Group companies barring Adani Enterprises continued to remain under pressure with Adani Total Gas and Adani Green Energy falling by 20 per cent each and Adani Power and Adani Wilmar too hitting the lower circuit with a decline of 5 per cent each. Adani Transmission and Adani Ports were down 14.9 per cent and 0.3 per cent respectively at the end of Monday’s trading.

Adani’s response to the Hindenburg report had a mixed effect on the stock group and the market. “The saga is likely to continue as a hanging risk in the minds of the investors in the medium-term. To expect a scientific assessment report either by a strong independent third party or government is dim in the short-term. Now the focus of the market will be on the budget and the US Fed policy,” said Vinod Nair, Head of Research at Geojit Financial Services.

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FPO bids: Ruchi Soya told to let investors withdraw

The Securities and Exchange Board of India (Sebi) on Monday asked Ruchi Soya Industries to give the option to the investors in the follow-on public offer (FPO) to withdraw their bids due to “circulation of unsolicited SMSs advertising the issue”.

In a directive to the investment bankers to the issue, the regulator has said prima-facie the contents of the unsolicited SMS appear to be “misleading/fraudulent” and “not in consonance” with Sebi regulations. The window for withdrawal will be available on March 28-30, 2022.

According to the Sebi notice, an SMS is to be sent to all the applicants of the received bids, informing them of the additional window of withdrawal. “A notice to investors shall be issued in the form of an advertisement in the newspapers, which will be issued on March 29 and March 30, 2022,” it said.

The company’s FPO, which closed on Monday, garnered 3.6 times subscription, including 0.9 times of retail subscription. Patanjali Ayurved-owned Ruchi Soya had last week hit the capital market to raise Rs 4,300 crore through its FPO as it aims to become a debt-free company. The price band has been fixed at Rs 615-650 per share. It had raised Rs 1,290 crore from anchor investors ahead of its FPO.

Sebi has in the past cautioned investors that unsolicited messages containing stock tips/investment advice with respect to listed companies are increasingly being circulated through bulk SMS, websites and social media platforms like WhatsApp and Telegram. Such messages are sent to investors and general public usually recommending to deal in specific stocks of listed companies, indicating target prices and giving fraudulent, misleading and false information relating to listed companies, inducing them to deal in these stocks, Sebi had said.

Patanjali, promoted by Baba Ramdev, acquired Ruchi Soya, which is listed on the stock exchanges, through an insolvency process for Rs 4,350 crore in 2019. After the FPO, Patanjali’s holding in Ruchi Soya will come down to about 81 per cent, and the public will hold about 19 per cent. Currently, it owns 98.9 per cent in Ruchi Soya.

The company is into fast-moving consumer goods (FMCG) and fast-moving health goods (FMHG) and owns brands such as Mahakosh, Sunrich, Ruchi Gold and Nutrela. The FPO is to meet Sebi’s requirement of minimum public shareholding of 25 per cent in a listed entity.

Ruchi Soya’s anchor investors include the likes of Aditya Birla Sun Life Mutual Fund, AG Dynamics Funds, Alchemy Capital, ASK MF, HDFC Life Insurance Company, Kotak MF, Quant MF, SBI Life Insurance Company, Societe Generale, BNP Paribas, The Sultanate of Oman Ministry of Defence Pension Fund, UTI MF, Yas Takaful PJSC and UPS Group among others.

The company plans to utilise the net proceeds of the FPO for repayment and/or prepayment of borrowings, funding incremental working capital requirements and general corporate purposes, according to the information provided in the red herring prospectus (RHP).

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