Three companies controlled by Adani Group founder Gautam Adani are considering a fundraising that could draw as much as US$5 billion, people familiar with the matter said, in a pivotal test of investor confidence in the tycoon’s empire less than four months after a scathing short-seller report plunged it into crisis.
Adani Enterprises Ltd, the flagship, as well as Adani Green Energy Ltd and Adani Transmission Ltd, could raise US$3 billion to US$5 billion to bolster the businesses, the people said, asking not to be identified as the information is private.
The boards of the three firms would meet today to consider raising funds through the sale of shares or other securities, exchange filings on Wednesday showed.
Photo: REUTERS
They did not disclose how much they intend to raise or who they are working with for potential deals. Adani Group stocks, which climbed on Thursday, were largely lower in yesterday’s early trading in Mumbai, India, as global index provider MSCI Inc said it would remove two companies from its India gauge.
The companies’ boards usually approve fundraising plans to enable management to quickly tap markets when opportunities arise.
Discussions are underway and there is no certainty that the companies would announce a sum they are looking to raise after today’s board meetings, the people said.
A representative for the Adani Group declined to comment on the fundraising details.
Any move by the Adani Group companies to tap a broader group of investors for funds could backfire if the market is not convinced that the cloud hanging over the stocks has lifted.
Despite the coal-to-cement conglomerate denying fraud allegations made by Hindenburg Research in January, the broadside triggered a weeks-long stock rout that wiped out more than US$100 billion of market value, forcing the billionaire to scrap a US$2.4 billion share sale by his flagship firm.
MSCI said that two Adani Group companies — Adani Transmission and Adani Total Gas Ltd — would be excluded from its India gauge at the end of this month.
Both stocks fell as much as 5 percent yesterday. Adani Enterprises erased its early gains and was trading 0.6 percent lower in Mumbai.
Removal from MSCI’s India gauge could lead to a combined outflow of about US$390 million from the two stocks, Smartkarma independent equities analyst Brian Freitas said.
Freitas, who predicted this exclusion, said the passive selling would keep the two stocks under pressure.
“Especially Adani Transmission, where there could also be some fundraising,” he added.
The Adani family in early March raised about US$1.9 billion selling shares in four firms to US investment firm GQG Partners, held investor roadshows and prepaid debt as they raced to bolster confidence and repair the damage from short seller’s accusations.
Adani company board meetings every year include proposing enabling resolutions to raise capital, which is part of their annual financial planning, the people said.
An analysis by Bloomberg of exchange filings showed that Adani Enterprises and Adani Transmission have sought board approval for fundraising every year in April or May since at least 2019.
Adani Green Energy secured such permission every year except in 2021, the data show.
The three firms raised almost US$2 billion from Abu Dhabi-based International Holding Company PJSC in April last year.
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