Adani’s $2.5 billion share sale faces a crucial day after the breakout

NEW DELHI, Jan 29 (Reuters) – Gautam Adani faces a critical day on Monday with the flagship company’s $2.5 billion share sale on the second day of bidding overshadowed by a $48 billion rout in the Indian billionaire’s shares triggered by a US Short Seller Report.

Seven listed companies belonging to the Adani conglomerate, which is headed by Asia̵[ads1]7;s richest man, saw their values ​​plummet after the Hindenburg Research report last week flagged concerns about high debt levels and the use of tax havens.

Adani Group issued a detailed response late on Sunday, saying it complies with all local laws and had made necessary regulatory disclosures. It has called the report baseless and said it is considering taking action against Hindenburg.

For 60-year-old Adani, the stock market crash has been a dramatic setback for a school dropout who rose rapidly in recent years to become the world’s third-richest man, before falling to seventh on the Forbes list last week.

The secondary share sale of Adani Enterprises (ADEL.NS) opened to private and institutional investors on Friday, but saw only 1% subscriptions as the company’s shares fell 11% below the minimum offer price.

Adani Group told Reuters in a statement on Saturday that the sale remains on track at the planned issue price, although sources said bankers at the country’s biggest secondary share sale were considering extending the timeline beyond January 31, or adjusting the price due to a fall in the share price.

“It is important for the Adani Group to ensure that the share sale goes through – if they stick to the price and don’t cut it, and the stock doesn’t bounce back, nobody will be keen to apply,” said Mumbai-based market analyst Ambareesh Baliga, who advises various family offices.

“Monday’s trade will be critical.”

In a separate statement on Sunday, Adani Group Chief Financial Officer Jugeshinder Singh said it is focused on the share sale and is confident it will go through. He also said that the anchor investors have shown faith and remain invested.

‘FREE FALL’

Some Adani Group shares have risen more than 1,500% in the past three years on aggressive expansion in businesses that include ports, power generation, airports and mining.

Adani Enterprises has set a floor price of 3,112 rupees per share and a ceiling of 3,276 rupees for the secondary share sale – well above their close of 2,761.45 rupees on Friday.

Arun Kejriwal, founder of Kejriwal Research & Investment, said investors are likely to wait until the last day of the share sale to see if the price band has been adjusted.

“I expect that the free fall from Friday may slow down, but it may be difficult to get back to a level before this fall,” he added.

Indian regulations state that the share issue must receive a minimum subscription of 90% and if it does not, the issuer must refund the entire amount.

Maybank Securities and the Abu Dhabi Investment Authority are among investors bidding for the anchor part of the issue.

On Saturday, index provider MSCI said it was seeking feedback from market participants on Adani and monitoring the factors that “may affect the eligibility of the relevant securities” in the MSCI indices.

There are at least six Adani Group companies in the MSCI India Index, with a cumulative weight of 4.31%.

Reporting by Aditya Kalra, Ira Dugal, Jayshree P Upadhyay and Chris Thomas; Editing by Alexander Smith

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