Adani Enterprises and Adani Transmission plan to raise Rs. 21,000 crores through a Qualified Institutional Placement (QIP).
In response to allegations of fraud by a US short seller that shook the port-to-energy conglomerate, the group’s boldest recovery strategy involves selling shares in two companies.
In a stock filing, Adani Enterprises Ltd and Adani Transmission announced their plans to raise funds through a Qualified Institutional Placement (QIP). Adani Enterprises Ltd, the flagship company of the Adani Group, aims to raise Rs. 12,500 crores, while Adani Transmission is targeting Rs. 8,500 crore.
The QIP is expect to generate significant capital, which utilized to consolidate debt and fund growth initiatives. The decision to raise funds through a QIP is part of the Adani Group’s recovery strategy following allegations of fraud by a US short seller, which impacted the group’s reputation.
The successful execution of the QIP will help the Adani Group to rebuild investor confidence and demonstrate its commitment to addressing concerns around corporate governance and transparency. By raising capital, the Adani Group will be better positioned to pursue growth opportunities and further select itself as a key player in the Indian business landscape.
Adani Enterprises has announce that it plans to raise funds of up to Rs. 12,500 crores through the issuance of capital shares or other eligible securities. The company’s board approve the decision to raise budgets through a Qualified Institutional Placement (QIP) or other methods permitted under relevant laws. The funds raised will utilize to reduce the company’s debt and finance its growth initiatives. The issuance of capital shares will be of Re 1 par value each of the company or a combination of eligible securities, subject to a total amount not exceeding Rs. 12,500 crores.
Adani Transmission said in a separate filing that its board approve raising funds by issuing up to a total number of equity shares of Rs 10 par value each for the company and other eligible securities or any combination thereof. Rs 8,500 crore or equivalent amount through QIP or other mode permitted under applicable laws.”
Adani Enterprises’ decision to raise funds through QIP comes after the cancellation of its Rs 20 billion FPO three months ago, which prompted by the Hindenburg report. Despite being fully subscribed, the company returned the money to subscribers due to the report’s allegations of fraud. Shares priced between Rs 3,112 to Rs 3,276 during the FPO are now available at Rs 1,964 (Friday closing price).
On January 24, the Hindenburg Group, a US-based short seller, published a report accusing the Adani Group of accounting fraud and counterfeit manipulation, which caused a decline in investor confidence and led to a drop in share prices.
The Adani Group refute all the accusations made by Hindenburg, while the Indian market regulator is investigating the allegations and transactions with related parties of the Adani Group following a directive from the Supreme Court.
Adani Green Energy had planned to announce financing plans similar to those of Adani Enterprises and Adani Transmission, but the company postponed its board meeting to May 24. This comes after a scathing report by the US-based short seller Hindenburg Group alleged fraudulent accounting practices and manipulated valuations at several Adani companies.
The report led to a sharp drop in Adani Group’s stock prices and forced Adani Enterprises to cancel a planned $2.5 billion stock sale. The Adani Group denied all allegations, but the market regulator is investigating the transactions of related parties of the Adani Group as directed by the Supreme Court. The group’s recovery strategy includes raising Rs 21,000 crore through Qualified Institutional Placement, the largest such effort since the sale of shares in two of its companies.